Investor Shifts: Flight to Safety Amidst Economic Worries
Investors exited global equity funds and moved towards money market and bond funds amidst economic uncertainty caused by U.S. tariffs and weak economic data. Safe-haven assets like gold saw decreased demand. Emerging markets saw mixed activity, with increased bond investments but reduced equity funding.
In a significant shift reflecting growing economic caution, global equity funds faced substantial sell-offs in the week leading up to August 6. The move comes as the market reacts to the latest U.S. tariff announcements and signals of economic frailty, driving investors to seek more stable returns.
Data from LSEG Lipper highlights a net sell-off of $7.82 billion in global equity funds, following the previous week's $29.95 billion outflow. Meanwhile, money market funds have seen robust growth, attracting $135.37 billion, marking the most substantial weekly purchase since early January.
While U.S. equity funds saw $13.7 billion in net sales, European and Asian markets attracted $3.45 billion and $1.85 billion, respectively. Sectoral funds in communications, industry, and tech bucked the trend, amassing hundreds of millions. Bond funds, particularly short-term ones, also drew significant interest, reflecting continued investor caution.
(With inputs from agencies.)
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