Investors dump global bond and equity funds in the week ending September 21

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The Federal Reserve raised interest rates by 75 basis points on Wednesday.

Investors withdrew from global bond and equity funds in the week ending Sept. 21, with caution ahead of the US Federal Reserve meeting, where further rate hikes were expected to tame rising inflation.

Investors left a net $7.32 billion in global bond funds, marking their biggest weekly net sale since Aug. 31, data from Refinitiv Lipper showed.

The Federal Reserve raised its benchmark rate by 75 basis points on Wednesday, its third rise in a row, and officials expect the rate to reach 4.4% this year, which was 100 basis points higher than what the Fed forecast three months ago.

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“Sooner or later, bond yields will peak, although the timing of this is difficult. The market currently expects the terminal US fed funds rate to be reached around March-June 2023,” said Bimal Patel, senior fund manager at Canada Life Asset Management. .

Global short- and medium-term bond funds saw their largest weekly outflow in 11 weeks, netting $4.98 billion, while investors also exited a net $3.29 billion in high-yield funds.

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Meanwhile, global equity funds witnessed sales worth $1.86 billion in a fifth straight week of net sales.

Financial services and consumer staples lost $1.55 billion and $687 million in outflows, respectively, but utilities and technology both gained about $300 million in inflows.

“Energy, finances and materials are still attractively appreciated compared to the rest of the US stock market. The valuation multiples of these companies remain low and they continue to benefit from continuing inflation and rising interest rates,” said Eugene Barbaneaagra, portfolio manager at SEI.

On the other hand, safer money market funds captured investor interest as they netted $28.23 billion, the largest weekly inflow since July 6.

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Data for commodities funds showed precious metals funds fell out of favor for a 13th week with a net divestment of $474 million. Investors also abandoned $60 million in energy funds.

An analysis of 24,559 emerging market funds showed that investors sold $2.39 billion in equity funds, a tenth consecutive weekly outflow, while also exiting $2.78 billion in bond funds.

(This story was not edited by The US Express News staff and was generated automatically Platforms.)

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