(Reuters) – Global equity funds recorded net outflows for the first time in six weeks in the week to July 21 as concerns over a resurgence of coronavirus cases worldwide prompted investors to move towards safer assets.
According to Refinitiv Lipper data, global equity funds saw net outflows of $5.9 billion in the week, led by a $10.4 billion outflow from U.S. equity funds. Asian and European equity funds, however, saw net inflows of $2.8 billion and $0.6 billion respectively.
(Graphics: Fund flows into global equities bonds and money markets: https://fingfx.thomsonreuters.com/gfx/mkt/akvezgqbmpr/Fund%20flows%20into%20global%20equities%20bonds%20and%20money%20markets.jpg)
OCBC analysts said in a note that a resurgence of COVID-19 cases caused by the Delta variant of the coronavirus had likely soured market sentiment, along with renewed lockdown measures.
“The softer risk sentiment likely caused investors to pivot away from equities to the less volatile bond market,” they said.
Among equity sector funds, cyclical sectors such as financials and industrials witnessed net outflows worth $2.6 billion and $1.4 billion respectively. Tech sector funds drew a net inflow of $2.3 billion, the biggest in more than four months.
Investors seeking lower-risk piled $3.8 billion into government bond funds, the most since the week ended February 3.
Riskier high-yield bond funds, however, faced outflows worth $2 billion.
(Graphics: Global fund flows into equity sectors: https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnrgkjpq/Global%20fund%20flows%20into%20equity%20sectors.jpg)
Global money market funds recorded a net inflow of $5.5 billion in the week, after facing a combined outflow of $148.5 billion in the previous five weeks.
Among commodity funds, energy sector funds saw marginal inflows, in contrast to precious metal funds.
An analysis of 23,669 emerging market funds showed bond funds received a net $954 million, and equity funds $318 million.
(Graphics: Fund flows into EM equities and bonds: https://fingfx.thomsonreuters.com/gfx/mkt/egpbknyrqvq/Fund%20flows%20into%20EM%20equities%20and%20bonds.jpg)
(Graphics: Global bond funds’ flows in the week ended July 21: https://fingfx.thomsonreuters.com/gfx/mkt/gdpzyrqzyvw/Global%20bond%20funds’%20flows%20in%20the%20week%20ended%20July%2021.jpg)
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kirsten Donovan)