Global equity fund inflows hit three-week record at $10.3bn

Investors bet on inflation being transitory and focus on broadening economic recovery

In this photo provided by the New York Stock Exchange, traders work on the floor, Thursday, June 17, 2021. Stock indexes are flipping between small gains and losses on Wall Street Thursday, as investors make preparations for a future where the Federal Reserve is no longer doing everything it can to support the economy. (Courtney Crow/New York Stock Exchange via AP)
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Investment flows into global equity funds jumped to the highest in three weeks in the week ended June 16, as investors shrugged off inflation worries and focused on the improving global economic outlook.

Global equity funds received a net $10.3 billion in the week ended June 16, compared with about $13bn outflows in the previous week, data from Refinitiv Lipper showed.

European equity funds led inflows, luring $8.6bn, while US equity funds and Asian equity funds had net purchases worth $0.4bn and $1.2 bn, respectively.

Global equities hit fresh peaks earlier this week on investor bets that higher inflation levels are transitory, and on optimism about broadening economic recovery from the pandemic.

However, the MSCI world equity index has dropped since Wednesday, as US Federal Reserve officials projected interest rate hikes sooner than expected.

The Lipper data showed global bond funds had a net buying of $9bn in the week ended June 16, although the inflows were the smallest in three weeks.

Global high-yield bonds witnessed net selling of $1.43bn, the biggest in four weeks. However, inflation-linked bonds continued to lure money flows for the seventh successive week.

Meanwhile, global money market funds faced outflows worth $56.6bn, the highest since December 2020.

Among commodity funds, precious metal funds had some meagre inflows, while energy funds continued to witness outflows for the third consecutive week.

Gold was set to register its worst week in almost nine months, shedding about 4.5 per cent so far, jolted by a rise in US Treasury yields since the Fed’s hawkish tilt on Wednesday.

An analysis of 23,712 emerging-market funds showed bond funds had inflows worth $1.27bn after marginal outflows in the previous week, while equity funds attracted $184 million, the third straight week of inflows.