Global equity, bond funds see outflows for eighth successive week

Global equity and bond funds faced outflows for the eighth time in a row in the week ended Oct. 12, Refinitiv Lipper data showed, undermined by worries over a recession as global interest rates surged further.

According to the data, investors dumped $7.3 billion worth global equity funds and $14.27 billion worth bond funds.

The equity outflows were focused on European equity funds, which witnessed net sales worth $7 billion, while U.S. equity funds had outflows of $2 billion. On the other hand, Asian equities received a small inflow of $410 million during the week.

Among bond funds, European funds again led with outflows worth $8.8 billion, while U.S. bond funds had an outgo of $4.9 billion.

Bonds globally have been sideswiped by the rout in UK government bonds, known as gilts, pushing yields on U.S. Treasuries up sharply on fears that UK pension funds were being forced into fire sales of assets.

The yield on 10-year Treasuries climbed to 4.08% this week, the highest in 14 years, as higher inflation prices raised fears the Federal Reserve’s ongoing efforts to tame inflation will spark a recession.

The International Monetary Fund this week warned of a disorderly repricing in markets, saying global financial stability risks have increased, raising the risks of contagion and spillovers of stress between markets.

Meanwhile, global investors put their money in safer assets as money market funds and U.S. government bond funds lured about $4.7 billion each during the week.

Emerging market (EM) bonds and equities faced outflows worth $2.6 billion and $1 billion respectively, based on an analysis of 24,465 EM funds.

Among commodity funds, precious metal funds had a small inflow of $83.2 million, while energy and industrial metal funds witnessed outflows.