Global equity funds gain inflows on Fed rate cut hopes, Trump's AI plans

(Reuters) - Global equity funds gained a fourth weekly inflow in five weeks in the week through Jan. 22 spurred by optimism for U.S. Federal Reserve rate cuts following cooling inflation and President Donald Trump's plans for extensive AI infrastructure spending.

According to LSEG Lipper data, global equity funds attracted a net $7.42 billion worth of inflows during the weeks after having lost about $4.3 billion in outflows in the prior week.

The MSCI World index has rallied nearly 5%, since the announcement of inflation report on Jan. 15, while the Europe's continent-wide STOXX 600 index hit a record high of 530.55 on Wednesday.

By region, investors snapped up a massive $6.69 billion worth of European equity funds. They also acquired Asian funds to the tune of $2.84 billion but ditched U.S. funds worth $3.2 billion on a net basis.

Sectoral funds were popular as these funds garnered a net $4.86 billion worth of inflows, the largest since Nov. 13, 2024. Tech, financials and industrials attracted a notable $1.86 billion, $1.38 billion and $1.33 billion, respectively in inflows.

Global bond funds drew a net $14.27 billion for a fourth consecutive week of net purchases.

The high yields segment was particularly in demand as it attracted $2.72 billion, the largest amount in 10 weeks. Loan participation funds and government bond funds also racked up a significant $2.13 billion and $1.95 billion worth of inflows, respectively.

Meanwhile, money market funds saw $44.13 billion worth of inflows, contrasting a net $94.14 billion worth of weekly sales, the previous week.

Among commodities, investors pulled $540 million from precious metal funds, posting a third weekly outflow in four weeks. Energy funds also saw a net $456 million worth of sales for a seventh consecutive week of outflows.

Data covering 29,630 emerging market funds revealed that equity funds had their 11th successive weekly outflow to the tune of $1.95 billion. Bond funds, however, received inflows for a third straight week, worth about $517 million on a net basis.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Toby Chopra)