Demand for global equity funds shrank in the week through Jan. 1, as higher U.S. Treasury yields led to caution and investors took profits during the year-end trading lull.
Data from LSEG Lipper showed that investors added a net $4.93 billion worth of global equity funds, an 86 per cent drop in inflows compared with about $35.1 billion worth of net purchases in the prior week.
The MSCI World index, which made a gain of over 15 per cent in 2024, is down 1.5 per cent this week after investors booked some profits following last year’s surge in stock valuations.
The increase in bond yields also dampened interest in equities, as the U.S. 10-year Treasury yield rose to 4.641 per cent last week, reaching its highest point since May 2.
By region, European, Asian, and U.S. equity funds garnered net purchases of $2.25 billion, $1.64 billion, and $490 million, respectively, though inflows decreased from the previous week in all three regions.
Sectoral equity funds experienced outflows for a fourth consecutive week, totalling $2.35 billion. The largest withdrawals from tech, healthcare, and industrial sectors amounted to $453 million, $375 million, and $346 million, respectively.
Safer money market funds remained popular for a second successive week as they attracted $72.99 billion, the largest weekly inflow in four weeks.
Global bond funds experienced modest inflows as investors purchased government bond funds worth a net $878 million. Loan participation funds also attracted $320 million, whereas corporate bond funds saw net outflows of $573 million.
In commodities, investors ditched $141 million worth of energy sector funds, the fourth consecutive week of selling. Gold and precious metals funds also witnessed outflows of about $149 million, in contrast to purchases of a net $1.25 billion, the previous week.
Data covering 29,579 emerging market funds indicated that investors extended withdrawals into a eighth straight week, with about $1.39 billion worth of net sales during the week. Bond funds also witnessed a net $870 million worth of outflows.
