Investors dump global bond and equity funds on recession risks

A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 3, 2022. REUTERS/Andrew Kelly

Sept 30 (Reuters) - Global bond and equity funds witnessed massive outflows in the week ended Sept. 28 as worries about a recession grew, with the U.S. Federal Reserve determined to keep interest rates higher to tame inflation pressure. read more

A selloff in British gilts following finance minister Kwasi Kwarteng's announcement of historic tax cuts also shook confidence in bond markets globally. read more

Investors offloaded a net $22.07 billion worth of global bond funds, in their biggest such weekly net sales since June. 22, data from Refinitiv Lipper showed.

Fund flows: Global equities bonds and other market

Bond funds in Europe and the United States recorded outflows of $12.37 billion and $9.08 billion respectively, although Asian funds obtained a marginal $80 million in net buying.

High-yield bond funds lost $5.34 billion, and short- and medium-term funds $8.27 billion, in their biggest weekly outflow since June 22, but government bond funds drew a net $3.05 billion in a fifth straight week of net buying.

But the drop in bond prices has attracted some investment managers as U.S. bond giant PIMCO increased its allocations to some high-quality bonds in recent weeks.

Global bond fund flows in the week ended Sept. 28

Global equity funds also witnessed liquidations worth $10.84 billion, much higher than the previous week's net selling of $1.65 billion.

Industrials and healthcare saw disposals of $764 million and $571 million, respectively. Funds in sectors such as tech, financials, materials, real estate, consumer staples and consumer discretionary also faced outflows.

Fund flows: Global equity sector funds

Data for commodities funds showed investors jettisoned precious metal funds for a 14th week, this time worth a sum of $1.39 billion, while exiting $42 million in energy funds.

An analysis of 24,589 emerging market funds showed investors drew $4.11 billion out of bond funds, and $2.35 billion out of equity funds in an 11th straight week of net selling.

Fund flows: EM equities and bonds
Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Clarence Fernandez

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