(Reuters) – Global money market funds attracted large inflows in the week to Sept. 22, as expectations that the Federal Reserve might soon start tapering its stimulus measures made investors cautious.
Troubles at property group China Evergrande also affected sentiment, raising concerns about spillover risks to other economies.
Investors purchased a net $30.25 billion in global money market funds in the week, which marked their biggest weekly net buying since Aug. 4.
(GRAPHIC: Fund flows into global equities bonds and money markets – https://fingfx.thomsonreuters.com/gfx/mkt/lbpgngzqxvq/Fund%20flows%20into%20global%20equities%20bonds%20and%20money%20markets.jpg)
In its latest policy statement on Wednesday, the U.S. central bank signalled it is likely to begin reducing its monthly bond purchases as soon as November and that interest rate increases may also follow more quickly than expected. Global equity funds faced a marginal outflow of $5 million in the week. U.S. equity funds saw net selling of $2.85 billion, while Asian and European equities received $2.93 billion and $0.73 billion in net purchases. Real estate sector funds saw $720 million in outflows.
Industrials and consumer staples sector funds also saw outflows of over $600 million, while consumer discretionary funds attracted a net $442 million.
(GRAPHIC: Global fund flows into equity sectors – https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwkarzvo/Global%20fund%20flows%20into%20equity%20sectors.jpg)
Global bond funds saw inflows for a ninth straight week, though purchases were 24% lower than in the previous week, at $8.92 billion. Global government bond funds pulled in a net $2.2 billion, the biggest in four weeks, while inflation protected bond funds attracted $680 million. High yield funds, however, faced outflows of $154 million.
The net inflows decreased as investors reiterate tapering fears from the Fed’s decision to taper bond purchases by the end of the year, said OCBC in a note.
(GRAPHIC: Global bond funds’ flows in the week ended Sep 22 – https://fingfx.thomsonreuters.com/gfx/mkt/dwpkrdloovm/Global%20bond%20funds’%20flows%20in%20the%20week%20ended%20Sep%2022.jpg)
Among commodity funds, investors purchased precious metals funds for a second straight week, worth a net $172 million, while they sold energy funds for a sixth successive week. An analysis of 23,900 emerging market funds showed investors sold $888 million in bond funds and $381 million in equity funds, their first weekly net sales in four weeks.
(GRAPHIC: Fund flows into EM equities and bonds – https://fingfx.thomsonreuters.com/gfx/mkt/klvykgbxavg/Fund%20flows%20into%20EM%20equities%20and%20bonds.jpg)
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Catherine Evans)
