Capital is fleeing equity funds, but bond funds are performing well

According to data from Refinitiv Lipper, global equity funds had a net outflow of $4.9 billion in the aforementioned seven days, US equity funds had a net outflow of $5.7 billion, while Asian and European funds had a modest outflow of $1.1 billion. and an inflow worth 0.59 billion dollars was recorded.

Among the sectors, financial funds lead with outflows of $1.5 billion, while real estate and energy sector funds experienced net sales of $446 million and $376 million, respectively.

According to analysts, the tug-of-war between Republicans and Democrats over the debt ceiling could harm the US economy, and if the stalemate does trigger a debt default, it could wipe billions of dollars off the stock market.

US consumer price inflation in April remained below expectations, which does not mean that investors should position themselves for another outstanding performance of the stock markets, assessed the situation, Mark Haefele, the investment director responsible for global asset management at UBS. According to him, now is the time to build a diversified bond exposure to stocks to make investment returns more stable for investors.

While equity funds suffered, global bond funds attracted $3.4 billion in fresh money during the week, marking the third consecutive inflow of capital. Funds investing in government securities gained $3.01 billion, while high-yield bond funds and inflation-linked bond funds recorded outflows of $1.5 billion and $264 million, respectively.

Global money market funds continued to post inflows for the third week in a row, at $10.8 billion.

We suspect that money market fund flows may remain strong until the US debt ceiling dispute is resolved, confidence in the stability of regional banks returns, and uncertainty about a possible US recession and downward revisions to earnings diminishes,” Reuters said. according to Kendall Dilley, portfolio manager at Vineyard Global Advisors.

Cover image: Getty Images

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