Global money market funds attract large inflows on election-driven caution
Saturday, 26 October 2024
Global investors channelised large investments into the safety of money market funds in the week through October 23 on caution over the upcoming elections in the United States and Japan, and the shift in the outlook for US interest rates, reports Reuters.
According to LSEG Lipper data, investors racked up a significant $25.78 billion worth of global money market funds during the week, clocking their biggest weekly net purchase since September 25.
Uncertainties around a U.S. presidential election on November 5, with polls suggesting a neck-and-neck race in crucial swing states, and potential risks of Japan's ruling Liberal Democratic Party losing its majority in a parliamentary election on Sunday, boosted demand for low-risk assets.
"We have signaled that investors should expect market volatility in the leadup to the US presidential election, and the S&P 500 was sitting at a record high before the declines in recent days," Mark Haefele, chief investment officer at UBS Global Wealth Management, said.
"As 5 November inches closer, market sentiment is likely to stay vulnerable."
The US money market funds drew a sharp $29.98 billion in net purchases, contrasting outflows worth $11.79 billion in the prior week.
In parallel, net purchases in global equity funds dropped to a four-week low of $4.2 billion.
Investors sold sectoral funds worth a net $1.59 billion following two successive weeks of net purchases. They sold real estate, tech and financials sector funds worth $725 million, $623 million and $152 million, respectively.
Meanwhile, China equity funds were popular for a fourth consecutive week as they garnered about $1.23 billion worth of inflows.
Global bond funds attracted investments for the 44th week in a row, valued at $8.98 billion on a net basis, albeit a seven-week low.
Global short-term and high-yield funds, and dollar-denominated medium-term bond funds attracted a notable $ 1.6 billion, $1.14 billion and $1.24 billion worth of inflows, respectively.