Global equity funds draw robust inflows on rate cut hopes

(Reuters) – Global equity funds attracted substantial inflows in the week through Dec. 27 as data showed U.S. inflation cooled further in November, cementing expectations that the Federal Reserve would cut interest rates in March next year.

The MSCI All-World index surged to 3184.32 on Thursday, its highest since January 13, 2022 amid market optimism over the prospects of rate cuts.

According to LSEG data, global equity funds received a net $16.01 billion during the week, logging their most significant weekly net purchase since March 22.

Investors poured about $14.57 billion into U.S. equity funds, the biggest amount since June 14. European and Asian funds however, faced outflows of roughly $1 billion and $182 million, respectively.

Global bond funds, meanwhile, received $1.07 billion in inflows after two successive weeks of outflows.

Investors purchased $2.62 billion worth of global corporate bond funds in contrast to disposals of about $3.9 billion in the prior week. High yield funds also secured inflows, worth about $679 million but government bond funds had outflows of $265 million.

Meanwhile, global money market funds attracted $9.12 billion, their first weekly inflow in three weeks.

Among the commodities segment, precious metal funds attracted about $111 million as inflows extended into a fourth successive week. Energy funds also attracted about $36 million in net buying.

Data covering 29,066 emerging markets funds showed equity funds secured $1.94 billion worth of inflows, breaking a 19-week-long selling streak. EM bond funds however, had $1.33 billion worth of outflows.