GRAPHIC-Global equity funds see first weekly inflow in seven weeks

BY Reuters | ECONOMIC | 08/12/22 08:54 AM EDT

Aug 12 (Reuters) - Global equity funds saw inflows in the week to Aug. 10 after six straight weeks of withdrawals, as investors took the view that the Federal Reserve might not be too aggressive with its interest rate hikes amid receding inflation worries.

According to Refinitiv Lipper, global equity funds lured $2.75 billion in their first weekly net purchase since June 22.

The data released on Wednesday showed U.S. consumer prices were unchanged in July, which has raised expectations of a 50 bps hike by the Federal Reserve in its September meeting, rather than a 75 bps which was widely anticipated earlier.

A report showing a pick-up in the U.S. services industry also bolstered sentiment.

U.S. and Asian equity funds received $4.21 billion and $0.69 billion respectively, although European funds had outflows of $2.52 billion.

Among sector funds, consumer staples and healthcare gained $535 million and $389 million respectively, but tech and financials lost $412 million and $386 million respectively.

Investors purchased about $5 billion of global bond funds, marking a second weekly inflow in a row.

Government bond funds attracted a net $2.25 billion in a second weekly inflow, however, investors sold short- & medium-term, and high yield funds of $1.66 billion and $47 million respectively.

Money market funds recorded outflows of $12.51 billion, the biggest in six weeks.

Data for commodities funds showed energy funds attracted $101 million in net buying, the first weekly inflow in seven weeks, but precious metal funds lost $394 million.

An analysis of 24,438 emerging market funds showed bond funds attracted purchases worth $766 million while equities notched up a fourth weekly capital outflow of $488 million.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru;Editing by Elaine Hardcastle)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.