Global equity funds have seen weekly outflows for the first time in six weeks, pressured by rising US Treasury yields and mounting concerns over the US debt burden and tax-cut legislation, following Moody's downgrade of the US sovereign credit rating, reports Reuters.
According to LSEG Lipper, global equity funds saw $9.4 billion in net outflows, a sharp reversal from more than $20 billion in inflows the previous week.
US equity funds led the retreat, with $11 billion in redemptions, followed by $4.6 billion from Asian funds. European equity funds, on the other hand, received $5.4 billion in inflows.
"We suspect investors will be more cautious about piling into the US stock market after the turmoil in April, especially given concerns around fiscal policy," said John Higgins, chief markets economist at Capital Economics.
The 30-year Treasury yield climbed to a 19-month high on Thursday, coming within a few basis points of its highest level since 2007, after the House of Representatives passed a tax-and-spending package.
In contrast to equities, global bond funds attracted $21.6 billion in inflows, indicating that investors see bonds as appealing at current yield levels. US bond funds took in $7.6 billion, European bond funds added $11 billion, and Asian bond funds saw $1.8 billion in net inflows.
By category, US government bond funds received $2.8 billion, US high-yield bond funds drew $1.2 billion, and European corporate bond funds gained $1.5 billion.
Money market funds also rebounded, taking in $18.1 billion, following $34 billion in outflows the previous week.
