Global equity funds suffered substantial outflows during the seven days to June 21 amid concerns over borrowing costs staying higher for longer as the European Central Bank raised interest rates and the Federal Reserve signalled more hikes.

Investors withdrew a net $15.12 billion from global equity funds which had seen net inflows of $16.04 billion a week earlier.

Fed Chair Jerome Powell struck a hawkish tone in his testimony before the US House Financial Services Committee on Wednesday, noting that a majority of policymakers expected two more quarter-point rate hikes by year end.

The Bank of England surprised investors by raising interest rates by half a percentage point on Thursday, saying it would take more time for inflationary pressures to subside.

The US and European equity funds witnessed outflows of $16.47 billion and $1.81 billion, respectively, while investors pumped about $2.6 billion into Asian funds.

Healthcare and industrial sectors saw $1.14 billion and $174 million worth of net selling, respectively. Financials attracted about $710 million worth of inflows.

Meanwhile, global bond funds extended their inflows streak to a 14th straight week, with about $4.07 billion flowing in.

Global government and corporate bond funds attracted about $1.9 billion each. Meanwhile, high-yield, loan participation and convertible funds suffered outflows of about $400 million each.

Published in The Express Tribune, June 24th, 2023.

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