(Reuters) – Global equity funds recorded their biggest weekly outflow in five weeks in the week to July 20, on investor caution ahead of crucial central bank meetings in which rate hikes are expected to be announced.
According to Refinitiv Lipper, investors offloaded a net $13.79 billion worth of global equity funds, marking the biggest weekly outflow since June 15.
(GRAPHIC: Fund flows- Global equities bonds and money market – https://fingfx.thomsonreuters.com/gfx/mkt/zgvomxlryvd/Fund%20flows-%20Global%20equities%20bonds%20and%20money%20market.jpg)
The European Central Bank raised its benchmark deposit rate by 50 basis points, above its own guidance of a 25-basis-point hike, to rein in soaring inflation levels in the region.
The U.S. Federal Reserve is also expected to raise policy rates by another 75 basis points at its meeting next week as it seeks to balance the risks of a stubbornly high inflation and the likelihood of a recession.
U.S. and European equities funds booked withdrawals of $8.45 billion and $5.6 billion, respectively, although investors poured about $740 million in Asian equity funds.
Sectoral data showed financial, consumer discretionary and metals and mining funds witnessed outflows of $995 million, $445 million and $416 million, respectively, but healthcare gained $511 million in inflows.
(GRAPHIC: Fund flows: Global equity sectors – https://fingfx.thomsonreuters.com/gfx/mkt/mypmnlyaovr/Fund%20flows-%20Global%20equity%20sectors.jpg)
Selling continued for a second week in global bonds funds as investors unwind $6.9 billion worth of holdings.
Government funds saw outflows of $2.49 billion after 15 weeks of inflows, while net selling in short- and medium-term bond funds eased to a 15-week low of $1.88 billion.
(GRAPHIC: Global bond fund flows in the week ended July 20 – https://fingfx.thomsonreuters.com/gfx/mkt/gkplgyklxvb/Global%20bond%20fund%20flows%20in%20the%20week%20ended%20July%2020.jpg)
Meanwhile, investors sold money market funds worth $1.34 billion after two weeks of purchases.
In the commodities space, net selling in gold and precious metal funds stood at $1.1 billion, a 63% bigger outflow than the previous week, while energy funds posted a fourth weekly outflow, valued at $180 million.
An analysis of 24,388 emerging market funds showed investors jettisoned equity fund worth 2.04 billion, the biggest outflow in 10 weeks, while bond funds suffered a sixth weekly outflow of $2.13 billion.
(GRAPHIC: Fund flows: EM equities and bonds – https://fingfx.thomsonreuters.com/gfx/mkt/mopanaoqlva/Fund%20flows-%20EM%20equities%20and%20bonds.jpg)
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Shounak Dasgupta)