NEW YORK: Global equity funds recorded their biggest weekly outflow in five weeks in the week to July 20, on investor caution ahead of crucial central bank meetings in which rate hikes are expected to be announced.

According to Refinitiv Lipper, investors offloaded a net $13.79 billion worth of global equity funds, marking the biggest weekly outflow since June 15.

The European Central Bank raised its benchmark deposit rate by 50 basis points, above its own guidance of a 25-basis-point hike, to rein in soaring inflation levels in the region.

The US Federal Reserve is also expected to raise policy rates by another 75 basis points at its meeting next week as it seeks to balance the risks of a stubbornly high inflation and the likelihood of a recession.

US and European equities funds booked withdrawals of $8.45bN and $5.6bn, respectively, although investors poured about $740 million in Asian equity funds.

Sectoral data showed financial, consumer discretionary and metals and mining funds witnessed outflows of $995m, $445m and $416m, respectively, but healthcare gained $511m in inflows.

Selling continued for a second week in global bonds funds as investors unwind $6.9bn worth of holdings.

Government funds saw outflows of $2.49bn after 15 weeks of inflows, while net selling in short- and medium-term bond funds eased to a 15-week low of $1.88bn.

Meanwhile, investors sold money market funds worth $1.34 billion after two weeks of purchases.

In the commodities space, net selling in gold and precious metal funds stood at $1.1bn, a 63 per cent bigger outflow than the previous week, while energy funds posted a fourth weekly outflow, valued at $180m.

An analysis of 24,388 emerging market funds showed investors jettisoned equity fund worth $2.04bn, the biggest outflow in 10 weeks, while bond funds suffered a sixth weekly outflow of $2.13bn.

Published in Dawn, July 24th, 2022