Global equity funds see significant outflows as investors book year-end profits

Global equity funds saw significant withdrawals in the week up to Dec. 20 as investor enthusiasm over potential rate cuts waned and profit-taking set in ahead of the year-end holidays.

The markets have experienced a sharp rally since late October. Investors reassessed positions during the week and sold $12.5 billion worth of equity funds, marking their largest weekly net selling since June 21.

The MSCI All-World index (.MIWD00000PUS) dropped 0.9 per cent on Wednesday, its steepest decline since Oct. 16, facing resistance near its March 2022 high of 724.49. Despite the recent pullback, the index has climbed nearly 15 per cent since reaching a seven-month low on Oct. 27.

Investors pulled a net $10.45 billion out of US equity funds, the biggest amount since Sept. 27. European and Asian funds also saw withdrawals worth $1.24 billion and $279 million, respectively.

The tech sector had $1.16 billion of outflows compared to net purchases of about $1.94 billion in the prior week. Financials and healthcare also recorded $838 million and $618 million worth of outflows, respectively.

Global bond funds lost $5.37 billion in outflows as net selling extended into a second successive week.

Global corporate bond funds broke an eight-week buying streak, with investors offloading funds worth a net $4.03 billion during the week. However, government and high-yield funds received $1.67 billion and $882 million, respectively, in inflows.

Among the commodities segment, energy funds witnessed $99 million worth of net selling, the first weekly outflow in four weeks. Precious metal funds attracted $22 million in net purchases, its lowest inflow in three weeks.

Data covering 29,155 emerging markets funds showed investors sold $5.66 billion worth of equity funds, the largest weekly net selling since March 2020. EM bond funds also witnessed outflows, amounting to $721 million on a net basis.