Global equity funds post biggest weekly outflow in six weeks

BY Reuters | ECONOMIC | 12/02/22 07:20 AM EST

(Reuters) - Global equity funds recorded enormous outflows in the week ended on Nov. 30 as investors booked profits - after a rally in the last month - amid concerns about global economic growth due to China's strict zero-COVID curbs.

According to Refinitiv Lipper data, investors withdrew a net $5.44 billion out of global equity funds, the highest since the week ended Oct. 19. MSCI's gauge of stocks across the globe gained about 6.8% in the last month.

Graphic: Fund flows: Global equities, bonds and money market https://fingfx.thomsonreuters.com/gfx/mkt/egpbykxnzvq/Fund%20flows-%20Global%20equities%20bonds%20and%20money%20market.jpg

The U.S. and Asian equity funds had outflows of $17.37 billion and about $170 million, respectively, although investors were net buyers in European funds with purchases worth $3.02 billion. Among equity sector funds, tech and financials booked outflows of $484 million and $308 million respectively. Still, healthcare funds remained in demand for a seventh week, obtaining a net of $823 million in inflows.

Graphic: Fund flows: Global equity sector funds https://fingfx.thomsonreuters.com/gfx/mkt/zjpqjkzkjvx/Fund%20flows-%20Global%20equity%20sector%20funds.jpg

Meanwhile, global bond funds also remained out of favour for a fourth consecutive week, recording outflows worth a net $14.14 billion. Global short- and mid-term bond funds lost $3.51 billion in a 15th straight week of outflow, while investors exited $1.09 billion worth of high-yield funds after two weeks in a row of purchases.

However, safer money market funds and government bond funds remained in demand, obtaining a net of $29.07 billion, the biggest in four weeks, and $1.86 billion respectively.

Graphic: Global bond fund flows in the week ended Nov 30 https://fingfx.thomsonreuters.com/gfx/mkt/gkplwgyglvb/Global%20bond%20fund%20flows%20in%20the%20week%20ended%20Nov%2030.jpg

Data for commodity funds showed energy funds received about $59 million, marking the sixth week of inflows, but precious metal funds had small outflows. According to data available for 24,756 emerging market (EM) funds, equity funds secured $656 million in a second straight week of inflows. Bond funds obtained $105 million after witnessing outflows in the previous week.

Graphic: Fund flows: EM equities and bonds https://fingfx.thomsonreuters.com/gfx/mkt/mypmonlnkpr/Fund%20flows-%20EM%20equities%20and%20bonds.jpg

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; editing by Mark Heinrich)

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.

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