# Rate rise fears prompt third week of global equity funds outflows
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-09-09
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Global Equity Funds Out of Favour Amid Inflation Concerns
Meta Description: Discover why investors are dumping global equity funds as fears of Fed interest rate hikes and Europe's energy crisis intensify. Find out more here.
URL: https://financedigest.com/rate-rise-fears-prompt-third-week-of-global-equity-funds-outflowshtml

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(Reuters) – Global equity funds remained out of favour in the seven days to Sept. 7 as a strong U.S. services industry report fuelled [concerns that the Federal Reserve would keep hiking interest rates to tame inflation](https://www.financedigest.com/shares-rise-but-concern-mounts-over-inflation-flare-up.html "Shares rise, but concern mounts over inflation flare-up").

Some [investors had expected](https://www.financedigest.com/wave-of-lawsuits-over-ftx-expected-but-investors-will-face-legal-hurdles.html "‘Wave’ of lawsuits over FTX expected, but investors will face legal hurdles") that the Fed might temper its rate hikes to avert a slowdown in the economy, which in turn would boost risk assets.

Another bearish factor for equities was a deepening of Europe’s energy crisis after Russia said one of its main gas [supply pipelines to the West would stay](https://www.financedigest.com/ceraweek-europe-gas-supplies-to-stay-tight-2-more-winters-equinor-ceo-says.html "CERAWEEK-Europe gas supplies to stay tight 2 more winters, Equinor CEO says") shut indefinitely, stoking renewed fears about shortages.

Investors dumped global [equity funds](https://www.financedigest.com/norway-wealth-fund-to-consider-investing-in-unlisted-equities.html "Norway wealth fund to consider investing in unlisted equities") worth a net $23.99 billion after ditching $31.73 billion worth of funds in the previous week, data from Refinitiv Lipper showed.

GRAPHIC: Fund flows: [Global equities bonds](https://www.financedigest.com/global-equities-gain-as-rising-bond-yields-pressure-gold.html "Global equities gain, as rising bond yields pressure gold") and money market https://fingfx.thomsonreuters.com/gfx/mkt/zjvqkrnazvx/Fund%20flows-%20Global%20equities%20bonds%20and%20money%20market.jpg

![](https://www.globalbankingandfinance.com/wp-content/uploads/2022/09/01.jpg)

U.S. and European equities funds [recorded outflows worth a net](https://www.financedigest.com/recruiter-hays-boosted-by-record-net-fees-but-cautious-on-outlook.html "Recruiter Hays boosted by record net fees, but cautious on outlook") $14.83 billion and $10.14 billion respectively, while Asia posted inflows of $1.23 billion.

Alejandra Grindal, chief economist at Ned Davis Research, said high inflation and tighter monetary policy were having an [impact on global equities](https://www.financedigest.com/4-trends-that-will-have-a-major-impact-on-private-equity-in-2021.html "4 Trends that will have a major impact on private equity in 2021"), adding that the energy crisis presents a much greater near-term risk for the euro zone.

Financials and consumer discretionary [funds witnessed net selling](https://www.financedigest.com/intercos-fund-shareholders-l-catterton-otpp-sell-6-stake-at-7-discount.html "Intercos fund shareholders L Catterton, OTPP sell 6% stake at 7% discount") of $1.36 billion and $810 million respectively, after both seeing inflows in the week before. Tech also faced withdrawals worth $1.03 billion in a third [week of selling](https://www.financedigest.com/this-is-the-best-week-for-cash-savvy-iphone-fans-to-sell-their-6s-models.html "This is the best week for cash-savvy iPhone fans to sell their 6s models").

GRAPHIC: Fund flows: Global [equity sector funds](https://www.financedigest.com/uk-investors-add-1-2-billion-to-equity-funds-in-march-calastone.html "UK investors add .2 billion to equity funds in March – Calastone") https://fingfx.thomsonreuters.com/gfx/mkt/xmvjoabjmpr/Fund%20flows-%20Global%20equity%20sector%20funds.jpg

![](https://www.globalbankingandfinance.com/wp-content/uploads/2022/09/02.jpg)

[Bond funds also remained out of favour for the third week](https://www.financedigest.com/shares-and-bonds-nervy-as-rate-hike-week-looms.html "Shares and bonds nervy as rate-hike week looms") in a row as they suffered net selling of $2.51 billion, although outflows reduced by 70% from the previous week.

Investors trimmed positions in high yield and, short and medium-term bond [funds by $4.03 billion and $947 million](https://www.financedigest.com/british-ev-startup-arrival-gets-300-million-funding-aims-to-slow-cash-burn.html "British EV startup Arrival gets 0 million funding, aims to slow cash-burn") respectively, but weekly purchases of government bond funds jumped to a eight week high of $5.43 billion.

GRAPHIC: Global bond fund flows in the [week ended](https://www.financedigest.com/european-shares-end-five-day-losing-streak-still-down-for-the-week.html "European shares end five-day losing streak, still down for the week") Sept. 7 https://fingfx.thomsonreuters.com/gfx/mkt/gkvlgnbjrpb/Global%20bond%20fund%20flows%20in%20the%20week%20ended%20Sept%207.jpg

![](https://www.globalbankingandfinance.com/wp-content/uploads/2022/09/03.jpg)

Meanwhile, [money market funds saw $934 million worth of inflows](https://www.financedigest.com/explainer-why-european-money-market-funds-inflows-are-lagging-behind-the-u-s-torrent.html "Explainer-Why European money market funds inflows are lagging behind the U.S. torrent?") after witnessing outflows for four consecutive weeks.

Energy funds received $138 million in their first weekly inflow in four weeks, but selling in [precious metal](https://www.financedigest.com/u-s-money-reserve-reviews-real-talk-about-diversifying-with-precious-metals.html "U.S. Money Reserve Reviews: Real Talk About Diversifying With Precious Metals") funds continued for an 11th week, totalling $455 million.

An analysis of 24,506 emerging [market funds showed both equity](https://www.financedigest.com/deutsche-bank-equity-bear-market-rally-will-stretch-into-2023-dollar-weaker.html "Deutsche Bank: Equity bear market rally will stretch into 2023, dollar weaker") and bonds suffered a third weekly outflow, amounting to $3.37 billion and $738 million respectively.

GRAPHIC: Fund flows: EM equities and bonds https://fingfx.thomsonreuters.com/gfx/mkt/myvmnzbjzpr/Fund%20flows-%20EM%20equities%20and%20bonds.jpg

![](https://www.globalbankingandfinance.com/wp-content/uploads/2022/09/04.jpg)

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Alexander Smith)


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