Global equity funds experienced their fourth weekly inflow in five weeks, influenced by expectations of U.S. Federal Reserve rate cuts, a cooling economic climate, and President Donald Trump's proposed significant AI investments. According to LSEG Lipper data, global equity funds attracted a net inflow of $7.42 billion after facing outflows of $4.3 billion the previous week.
Following the announcement of the inflation report on Jan. 15, the MSCI World index surged almost 5%, with Europe's STOXX 600 index reaching a record high of 530.55 on Wednesday. Investors directed substantial investments into European equity funds ($6.69 billion) and Asian funds ($2.84 billion), while pulling out $3.2 billion from U.S. funds.
Sectoral funds were also popular, attracting a net inflow of $4.86 billion, the largest since Nov. 13, 2024. Tech, financials, and industrials stood out, drawing $1.86 billion, $1.38 billion, and $1.33 billion in inflows, respectively.
Global bond funds recorded a net inflow of $14.27 billion for the fourth successive week of net purchases. Among them, high yield bonds were in demand, gathering $2.72 billion, the highest in 10 weeks, while loan participation funds and government bond funds received significant inflows of $2.13 billion and $1.95 billion, respectively.
Money market funds saw a notable $44.13 billion inflow after a week of $94.14 billion in sales. In the commodities sector, precious metal funds experienced an outflow of $540 million, marking the third consecutive week of outflows, while energy funds had net sales of $456 million, continuing a seven-week streak.
Emerging market funds saw their 11th straight week of equity outflows totaling $1.95 billion, while bond funds received inflows for the third week in a row, reaching approximately $517 million on a net basis.