Global Equity Funds End 13-Week Inflow Streak with $5.9 Billion Withdrawal

Global equity funds experienced their first weekly net outflow since May, ending a 13-week streak of positive inflows as investors adopted a more cautious stance. For the week ending August 26, investors withdrew a net $5.87 billion from stock funds worldwide, according to LSEG Lipper data.

The shift in sentiment preceded a highly anticipated earnings report from artificial intelligence chipmaker Nvidia and potentially market-moving remarks from the Federal Reserve Chair at the Jackson Hole Economic Symposium.

US Equities Lead Outflows

The withdrawal from global equities was driven overwhelmingly by U.S. funds, which recorded substantial net sales of $22.33 billion. This contrasted sharply with other regions, as European equity funds attracted $7.92 billion in new capital and Asian equity funds saw inflows of $4.8 billion.

On a sector basis, technology funds continued to draw investor interest, securing $3.2 billion in net inflows. This was likely fueled by optimism surrounding Nvidia's results, which later in the week forecast a 70% jump in revenue. Conversely, financial-sector funds registered net outflows of $948 million.

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Shift in Fixed Income and Commodities

Investor caution was also evident in fixed-income and commodity markets. While global bond funds still attracted $10.25 billion, the pace of inflows slowed to a four-week low. Key trends included:

• Short-term bond funds saw inflows accelerate to a seven-week high of $6.29 billion.
• High-yield bond funds experienced their first weekly outflow since late July, with investors pulling $1.77 billion.
• Precious metals funds saw a surge in demand, with net inflows hitting a six-month high of $4.21 billion, indicating a flight to safe-haven assets.

Money market funds, often used as a proxy for cash holdings, also saw a reversal, posting net outflows of $19.74 billion and ending a four-week streak of inflows. Meanwhile, emerging markets remained a bright spot, with equity funds attracting a net $709 million for a seventh consecutive week of inflows.