Global equity funds see big outflows as rate outlook shifts

LONDON, Jan 19 (Reuters): Global equity funds witnessed hefty outflows in the week up to Jan. 17 as investors trimmed positions after central bankers in the US and Europe pushed back against market expectations of an early interest rate cut.
Investors pulled a net $8.68 billion out of global equity funds during the week, logging the third straight week of outflows, data from LSEG showed.
Hopes of a policy rate cut in March dimmed on Tuesday as US Federal Reserve Governor Christopher Waller cautioned against trimming rates until lower inflation can clearly be sustained, echoing remarks from some of his European counterparts.
The US and European equity funds saw net selling of$9.23 billion and $1.48 billion, respectively. Conversely, Asia funds attracted about $1.72 billion, the second successive week of inflows.
Global sectoral equity funds raked in about $329 million in inflows during the week. The tech and financials were the more popular sectors, with $713 million and $390 million, respectively, in net purchases.
The consumer discretionary sector, however, saw outflows worth $285 million.
Investors showed strong interest in debt funds, pumping a net $14.33 billion into global bond funds during the week, the biggest amount in about a year.
Corporate bond funds received $5.92 billion, the largest amount since at least April 2020. Government and high-yield bond funds also secured around $1.12 billion and $1.65 billion, respectively.
At the same time, investors exited about $28.51 billion worth of money market funds, breaking a three-week-long buying streak.