Global equity funds faced huge outflows on caution ahead of Fed meet

(Reuters) – Global equity funds suffered sharp outflows in the seven days to June 12 as investors cautiously took out money ahead of a key U.S. inflation report and Federal Reserve policy decision that could determine the near-term outlook for interest rates. 

According to LSEG data, investors offloaded a massive $14.67 billion worth of global equity funds during the week, their heaviest weekly net sales since April 17.

The U.S. Federal Reserve left interest rates unchanged on Wednesday and lowered expectations for rate cuts this year. However, a cooler-than-expected CPI report buoyed global stocks.  

U.S. equity funds, in particular, faced big outflows as investors sold a net $21.93 billion during the week, the most since December 2022. European and Asian equity funds, in contrast, received $4.48 billion and $1.74 billion, respectively in inflows.

Among sectoral funds, the tech sector drew $2.2 billion, the biggest amount since mid-February, while healthcare funds saw $509 million worth of net selling.

At the same time, global bond funds remained popular for a 25th successive week, accumulating about $9.97 billion on a net basis.

Global corporate bond funds attracted a notable $2.44 billion, the highest since March 20. Investors also poured a net $2.15 billion into government bond funds.

Money market funds saw a second consecutive week of inflows, gaining about $25.65 billion on a net basis.

Among commodities funds, precious metal funds gained a net $127 million, their second weekly inflow in a row. Investors shed $153 million worth of energy funds, however.

Data covering 29,549 emerging market funds showed equity funds had a slim $57 million in outflows, the first weekly net selling in six. Bond funds also lost $1.08 billion in net selling, after net inflows of $819 million last week.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kevin Liffey)

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