Global Equity Funds See Largest Outflows in Three Months Amid Middle East Tensions, U.S. Trade Uncertainty
Global equity funds experienced significant withdrawals totaling $19.82 billion in the week ending June 18, marking the largest outflow in three months, according to LSEG Lipper data. The sharp retreat reflects growing investor caution amid heightened geopolitical instability in the Middle East and lingering uncertainty surrounding U.S. trade policies, both of which have dampened risk appetite.
U.S. equity funds led the downturn with massive net outflows of $18.43 billion, their steepest in three months. Asia also saw notable withdrawals of $2.86 billion, while Europe stood out by bucking the trend with $640 million in inflows. This divergence highlights how regional dynamics are playing out differently depending on investor perception of risk and opportunity.
Despite the broader selloff in equities, sector-specific funds showed resilience, attracting $573 million in inflows for the fourth consecutive week. The technology and industrial sectors drove this trend with $1.5 billion and $752 million in net inflows respectively, indicating investors’ selective confidence. However, financial sector funds saw a sharp pullback, losing nearly $1.5 billion.
In contrast to equities, global bond funds remained strong, posting $13.13 billion in net inflows for the ninth week in a row. Investors favored euro-denominated bonds, short-term, and high-yield bond funds, which collectively attracted billions in fresh capital. These trends suggest a flight to perceived safety and yield as equity market volatility persists.
Meanwhile, commodity funds, particularly those focused on gold and precious metals, saw the highest demand in two months, with $2.84 billion in inflows. Money market funds, however, saw a net outflow of $2.7 billion, continuing a reversal from the previous week. In emerging markets, bond funds remained popular, drawing $2.5 billion, though equity funds faced modest outflows of $234 million.
Source: Reuters