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Equity Funds Hit With Biggest Weekly Withdrawals This Year

Concern about rate hikes and war in Ukraine spurred investors to withdraw $15.2 billion, the biggest weekly amount since December 15, according to Refinitiv-Lipper data.


Currency traders have seen a tumultuous week but many say they expect the recent volatility to continue.
Currency traders have seen a tumultuous week but many say they expect the recent volatility to continue, given it is partly driven by US rate hikes. Reuters photo by Jason Lee from January 2016.

 

Concern over the war in Ukraine and looming rate hikes by the US Fed and other central banks spurred a huge outflow of cash from global equity funds in the week to April 20.

Investors withdrew a net $15.2 billion – the most since mid-December, according to data from Refinitiv Lipper.

 

 

With the battle against inflation about to ramp up and the Covid lockdown continuing in Shanghai and key financial hubs in China, analysts have been slashing growth forecasts for companies and major economies.

The International Monetary Fund on Tuesday reduced its forecast for global economic growth by nearly a full percentage point.

Investors exited US and European equity funds worth $16.06 billion and $1.35 billion respectively, but poured $1.41 billion into Asian funds. By sector, healthcare, mining and utilities obtained $0.99 billion, $0.74 billion and $0.37 billion, respectively.

 

 

Global bond funds saw weekly outflows increase to a five-week high of $12.76 billion, on rising bets that the Federal Reserve would be more hawkish than previously expected.

Some traders said investors were spooked by the latest call from Nomura where analysts predicted the Fed would hike rates by 75 basis points in both June and July, on top of a 50-basis-point move in May.

Global short- and medium-term bond funds, and high-yield bond funds recorded outflows of $5.45 billion and $2.76 billion respectively, while inflation-protected funds lured an eighth weekly inflow of $172 million.

The 10-year Treasury Inflation-Protected Securities’ (TIPS) yields briefly turned positive on Tuesday for the first time since March 2020.

 

 

Meanwhile, weekly money market outflows jumped to a nine-week high of $71.98 billion.

Commodities funds data showed precious metal funds gained $784 billion in a 14th straight week of inflow, while energy funds had an outflow of $328 million.

An analysis of 24,182 emerging market funds showed investors were net sellers in both equity and bond funds for second week in a row, discharging funds worth $458 million and about $1 billion, respectively.

 

 

• Reuters with additional editing by Jim Pollard

 

 

ALSO on AF:

 

 

Asian Equities Saw Biggest Foreign Outflows in Two Years

 

Central Banks Prepare For First Ever Global Asset Cull

 

Australia’s Central Bank Warns of Looming Rise in Interest Rates

 

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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