Investors Withdraw $4.48 Billion from Global Equity Funds

SadaNews Economy - Global equity funds recorded their first weekly outflows in 10 weeks during the week ending November 26, as concerns over inflated valuations, particularly in the technology sector, overshadowed optimism regarding the expected cuts to U.S. interest rates next month.

According to data from the London Stock Exchange, investors withdrew a net $4.48 billion from global equity funds, marking the first net sales in a week since September 17, according to Reuters.

In the last week, investors disposed of U.S. and European equity funds worth $4.56 billion and $1.21 billion, respectively, while they invested about $170.37 million in Asian equity funds.

Overall, global stock markets experienced volatility during November, driven by fears over inflated valuations of technology companies and a historic U.S. government shutdown that lasted 43 days.

Vincenzo Vida, Chief Investment Officer at DWS, said: "We still consider artificial intelligence to be a market driver, but the sector is likely to be evaluated more selectively, and the high valuations of several AI companies pose disappointment risks. For this reason, we maintain diversification in our investments overall, and regard gold as a relative hedge."

At the same time, inflows into global bond funds slowed to their lowest level in 22 weeks, at $6.77 billion during the week.

Euro-denominated bond funds experienced net outflows of $3.58 billion, marking their first weekly net sales since July 9, while short-term bond funds saw gains of $5.56 billion for the fourth consecutive week of net purchases.

Investors added $2.54 billion to money market funds, ending a two-week selling trend.

In contrast, gold and precious metals funds maintained their popularity for the seventh consecutive week, attracting around $1.66 billion in weekly inflows. In emerging markets, investors acquired equity funds worth $3.34 billion, the highest level since July 9, along with $5.98 million from bond funds, according to data from 28,793 mutual funds.

U.S. equity funds saw their first weekly inflow in 6 weeks during the week ending November 26, as fears over high valuations in the technology sector prompted investors to take profits, overshadowing optimism regarding a potential interest rate cut by the Fed next month.

Data from LSEG showed that U.S. equity funds disposed of a net investment of $4.56 billion in their first net weekly sales since October 15.

The S&P 500 index was up more than 3% so far this week, supported by expectations of interest rate cuts, but investors remained cautious amid November's volatility, which was affected by concerns about inflated tech valuations and the extended U.S. government shutdown.

U.S. large-cap corporate funds saw weekly net outflows of $144 million, following 5 consecutive weeks of inflows, while investors disposed of mid- and small-cap corporate funds worth $1.69 billion and $885 million, respectively.

U.S. bond funds maintained their popularity for the eighth consecutive week, attracting approximately $8.6 billion in weekly inflows.

Government and Treasury bond funds received $4.05 billion, the largest weekly amount since September 24, while taxable local fixed-income funds achieved weekly net inflows of $1.59 billion.

Meanwhile, U.S. money market funds experienced inflows of $25.28 billion after two consecutive weeks of net sales.