Global investors dumped equity funds for the second consecutive week in the week ended April 10, amid persistent inflation worries and diminishing expectations for a US Federal Reserve rate cut in June.
Economic data released on Wednesday showed US consumer prices increased more than expected in March, casting further doubt on whether the Federal Reserve will start cutting interest rates in June.
Global equity funds saw an outflow of $2.9 billion during the week, with US and Asian equity funds witnessing outflows worth $2.7 billion and $1.9 billion respectively.
On the other hand, European equity funds collected an inflow of $891 million.
Among sectoral funds, investors withdrew a net $708 million out of the technology sector, breaking a 12-week long buying trend.
By contrast, global equity funds had a robust inflow of $60 billion in the first quarter of the year, driven by investor anticipation of Federal Reserve rate cuts, enhancing the appeal of riskier global equities.
Meanwhile, global bond funds attracted strong inflows, amassing $12.8 billion over the week, spurred by dampened expectations for a US rate cut in the near term.
Mark Haefele, chief investment officer of UBS Global Wealth Management, revised his outlook anticipating the Fed could lower rates by 50 basis points starting in September instead of June.
“With US Treasury 10-year yields at 4.55 percent by Wednesday’s US equity close, we view now as an attractive time to lock in yields. We retain our preference for quality bonds,” he said.
Medium-term US dollar bonds saw robust inflows of $2 billion, while government short-term US dollar bonds garnered $1.3 billion. Loan participation funds secured $686.6 million, while US dollar municipal funds raised $505 million.
On the other hand, US dollar corporate bond funds experienced outflows totaling $1 billion, and global high-yield dollar bond funds saw a reduction of $473 million.