Global Funds See Inflows into Stocks and Bonds, Goldman Sachs Reports

Global investment funds attracted significant capital into both equities and fixed income, reversing a recent outflow trend and signaling a potential return of investor risk appetite, according to a new report from Goldman Sachs.

Equity Inflows Rebound

Global equity funds recorded net inflows of $56 billion in the week ending July 1, a sharp turnaround from the $14 billion in outflows seen the prior week, the report stated. The technology sector was the primary beneficiary, receiving the largest share of inflows across all equity sectors.

Among developed markets, funds domiciled in the United States led the capital intake. In emerging markets, inflows were primarily driven by funds focused on Mainland China, Korea, and Taiwan. Goldman Sachs strategists noted that Korean and Taiwanese equities have seen a sharp increase in inflows this year, supported by expectations of strong earnings growth from the "memory super-cycle," though they cautioned about elevated volatility.

Fixed Income and Money Markets Attract Capital

The positive sentiment extended to fixed income, where funds maintained strong support from investors. Goldman Sachs highlighted sustained demand across various fund types.

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Key trends in fixed income included:

• Continued inflows into short-duration and inflation-protected bond funds.
• Net inflows into both hard-currency and local currency emerging market bond funds.

Additionally, money market fund assets increased by $40 billion, indicating that investors also continue to build significant cash positions.

Currency Flows Signal Risk-On Sentiment

Cross-border foreign exchange flows were described as "largely positive," which Goldman Sachs interprets as a sign of supported risk sentiment among investors. The U.S. dollar saw the strongest net demand, while the Chinese yuan recorded the largest net outflows.