Global equity funds draw strong inflows ahead of Fed rate cut Reuters

(Reuters) – Global investors piled into equity funds in the week to Sept. 18, anticipating an interest rate cut by the Federal Reserve to kick off the long-awaited tapering cycle.

Investors bought a net $5.21 billion in equity funds during the week, after net purchases of $6.54 billion the previous week, according to LSEG data.

The US Federal Reserve unexpectedly cut its benchmark rate by 50 basis points, which supported riskier assets around the world, including stocks and commodities.

Asian equity funds attracted net inflows for the 16th consecutive week, totaling about $2.77 billion. European funds also saw significant inflows, attracting net inflows of $3.29 billion, while net sales in U.S. funds fell to a four-week low of $1.37 billion.

Sector funds posted net withdrawals for the third week in a row, totaling about $1.2 billion. The financials and technology sectors led these outflows, with net sales of $950 million and $606 million, respectively.

Investors dumped about $16.06 billion in money market funds after a six-week net buying streak, which supported increased risk appetite among investors.

Global bond funds drew inflows for a 39th consecutive week, netting $11.24 billion.

Short-term global bond funds received $2.3 billion, following net purchases of $2.65 billion a week earlier. High-yield funds also drew $1.71 billion in inflows, although investors pulled about $218 million from government bond funds.

Gold and other precious metals funds maintained their appeal for a sixth straight week, attracting about $544 million in net purchases, while energy funds reversed a four-week inflow trend with net sales rising to 129 million dollars.

Data covering 29,544 emerging market funds showed equity funds posted a 15th weekly outflow to a net value of $293 million. In contrast, bond funds secured $416 million, marking their 13th straight week of inflows.