Global equity funds draw big inflows as inflationary pressures ease

(Reuters) – Global equity funds attracted substantial inflows in the week ending Sept. 13, buoyed by hopes the Federal Reserve might halt its rate increases amidst easing inflationary concerns, potentially boosting risk assets.

According to LSEG data, investors channelled approximately $9.95 billion into global equity funds, marking the most substantial net weekly acquisition since June 14.

Breaking it down regionally, U.S. and Asian equity funds had inflows of roughly $9.7 billion and $1.62 billion, respectively. However, European funds were hit with outflows, shedding $662 million.

By sector, consumer discretionary funds saw an influx of about $867 million and tech sector funds garnered around $474 million. Other sector-focused fund remained out of favour.

Last month’s U.S. consumer prices saw their steepest rise in 14 months due to escalating gasoline costs, yet the year-on-year core inflation increase was the smallest in almost two years, which could potentially provide some leeway for the Federal Reserve to keep interest rates unchanged at its upcoming Wednesday meeting.

Contrastingly, the allure of global money market funds appeared to wane. They registered a net intake of $10.65 billion, a sharp decline from the $60.5 billion in the preceding week.

Global bond funds recorded $531 million in outflows, a reversal from the inflows seen over the past three weeks. High-yield funds reported around $899 million in outflows, breaking their two-week buying streak. But both corporate and government bond funds observed inflows, netting $1.09 billion and $831 million, respectively.

Among commodities, precious metal funds continued their selling trend into a 16th week with $454 million in outflows. Energy funds also experienced a dip, registering $128 million in outflows, marking a shift from the previous two weeks of net purchases.

Data covering 28,218 emerging market funds highlighted a net exit of $1.95 billion from equity funds. Bond funds in these markets also faced headwinds, with a disposal of approximately $795 million, marking their seventh consecutive week of net selling.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Andrew Heavens)

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