(Reuters) – Global bond funds saw huge outflows in the week ended December 15 as investors expected major central banks to change the direction of their monetary policy at key policy meetings this week, amid pressure from rising inflation levels.
Investors sold $6.91 billion in global bond funds, the largest weekly net sale since April 8, 2020, data from Refinitiv Lipper showed.
Graphic: Fund flows into global equities and money markets https://fingfx.thomsonreuters.com/gfx/mkt/akvezoleqpr/Fund%20flows%20into%20global%20equities%20bonds%20and%20money%20markets.jpg
Ahead of the Federal Reserve’s monetary policy meeting, which ended on Wednesday, the US consumer price index accelerated 6.8% in the 12 months to November, the largest year-on-year increase since June 1982.
The Fed doubled the pace of tapering its monthly asset purchase program at its monetary policy meeting this week and announced three rate hikes next year. The European Central Bank also slowed the pace of its bond purchases, while the UK hiked interest rates.
US bond funds posted net sales of $7.48 billion, although investors bought European and Asian bond funds for $1.45 billion and $0.19 billion, respectively.
Global government bond funds posted outflows of $809 million after seven consecutive weeks of inflows, even as inflation-linked funds attracted $1.32 billion in net purchases, up 39% from the previous week.
Chart: Global bond fund inflows for the week ended December 15 https://fingfx.thomsonreuters.com/gfx/mkt/klpyknrqmpg/Global%20bond%20fund%20flows%20in%20the%20week%20ended%20Dec%2015.jpg
Investors sold $13.14 billion in global equity funds compared to net purchases of $3.43 billion in the previous week.
Among equity sector funds, technology funds secured $1.91 billion in inflows, compared to outflows the previous week. Healthcare and materials funds received over $400 million each, but utilities faced $588 million in net sales.
Graphic: Global fund flows into equity sectors https://fingfx.thomsonreuters.com/gfx/mkt/byvrjqamrve/Global%20fund%20flows%20into%20equity%20sectors.jpg
Global money market funds also saw net outflows of $20.46 billion after eight consecutive weeks of inflows.
Within commodity funds, precious metals funds recorded net sales of $402 million, recording outflows for the second straight week. Investors also sold $96 million in energy funds after two consecutive weeks of net purchases.
An analysis of 24,070 emerging market funds found that bond funds saw outflows of $4.49 billion, the largest since March 25, 2020, while investors sold $1.51 billion in equity funds.
Chart: Fund flows into EM equities and bonds https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnlxjbpq/Fund%20flows%20into%20EM%20equities%20and%20bonds.jpg
(Report by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru)
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