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Global equity funds see fourth straight week of outflows on slowdown fears

(This May 12 story has been corrected to change outflows from inflation-linked bonds to $23.3 million from $268 billion segments 13)

By Patturaja Murugaboopathy

(Reuters) – Global equity funds see fourth straight week of outflows in week to May 01, hit by lingering fears of a U.S. debt-ceiling impasse and an economic slowdown.

Global equity funds saw $4.9 billion in outflows, the fourth straight outflow, according to Refinitiv Lipper data. U.S. equity funds saw outflows of $5.7 billion, while Asian and European funds saw inflows of $1.1 billion and $0.13 million, respectively.

Among sector funds, financials led with outflows of $1.5 billion, while real estate and energy sector funds posted net sales of $446 million and 268 million, respectively.

The debate over the debt ceiling between Republicans and Democrats could hurt the U.S. economy and if the impasse does spark a default, it could wipe billions of dollars from stocks, analysts say funds.

U.S. inflation data released on Wednesday showed weakening price pressures, but analysts remained cautious.

Mark Haefele, chief investment officer at UBS Global Wealth Management, said lower-than-expected U.S. consumer price inflation in April doesn’t mean investors should brace for another outperformance in stocks.

“In fact, we think the outlook for equities looks more challenging as the bar is set higher for incremental performance at current high valuations,” he said .

“The risk-reward profile of high-quality bonds appears to be more attractive in our view, and we believe now is the time to build diversified fixed income exposures to add stability to investment returns.”

Global bond funds attracted $3.4 billion this week, their third straight week of inflows.

Government bond funds get $3. billion, while high-yield bond funds and inflation-linked bond funds saw outflows of $1.5 billion and $376.3 million, respectively.

Global money market funds continued to attract inflows for the third week in a row, with inflows of $10.8 billion.

“We suspect money market flows are likely to remain strong until the U.S. debt ceiling showdown is resolved, confidence in steady returns from regional banks and a possible U.S. economy Recession uncertainty and downward earnings revisions have diminished,” said Kendall Dilley, portfolio manager at Vineyard Global Advisors.

59,446 Data from Emerging Markets Funds Shows Investors Gain Net $ $446 million in stock funds but net exits from bond funds worth 446 million in value.



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