Introduction
Global equity funds experienced outflows for the second consecutive week as of May 28, driven by increased risk aversion linked to U.S. President Donald Trump's tariff threats against European Union imports and overseas-produced iPhones, along with rising long-tenor bond yields.Context
During this period, investors withdrew a net $7.52 billion from global equity funds, following a $9.48 billion sell-off from the prior week, according to data from LSEG Lipper. In a surprising decision, President Trump announced 50% tariffs on EU imports starting June 1, although he later postponed the implementation to July 9 after discussions with European Commission President Ursula von der Leyen.Developments
Asian equity funds experienced significant selling pressure, with nearly $6 billion in outflows, marking the largest weekly decline since August 2018. U.S. equity funds saw a pullout of $5.46 billion, while European equity funds attracted $3.64 billion, indicating a sustained trend of net purchases for the seventh week in a row.In contrast, global bond funds attracted $15.27 billion in net inflows, continuing a positive trend for a sixth consecutive week. U.S. bond funds accounted for $6.98 billion, while European and Asian bond funds garnered $6.23 billion and $1.27 billion, respectively. Additionally, government and high-yield bond funds yielded inflows of $1.9 billion and $1.51 billion.
On the other hand, money market funds saw a significant reversal, with investors withdrawing $36.52 billion, countering the previous week’s inflow of $18.71 billion. Gold and precious metals commodity funds managed to attract $1.3 billion, breaking a five-week streak of outflows.
Among the 29,627 emerging market funds tracked, equity outflows slowed to $183 million from $1.4 billion the prior week, while bond funds drew in $885 million, marking a fifth consecutive week of inflows.