Global equity funds log three-week inflow high before late-week selloff
In brief
- Global equity funds pulled in $22.01 billion in net inflows for the week ending August 19, the largest weekly haul since July 29
- US equity funds led with $11.72 billion; European and Asian funds contributed $4.70 billion and $2.96 billion respectively
- Late-week selloff driven by rising government bond yields, climbing oil prices, and renewed inflation concerns
- Technology funds rebounded with $1.55 billion after prior outflows; bond funds posted their 20th consecutive week of positive flows
Inflows Across the Board
US equity funds did the heavy lifting, attracting $11.72 billion of the total—their strongest showing since late July. European funds brought in $4.70 billion, while Asian equity funds added $2.96 billion. The broad strength reflected the market's appetite for equities heading into earnings season.
Technology funds showed particular resilience. They attracted $1.55 billion, a notable rebound after prior weeks of outflows. Investors positioned ahead of major tech earnings, especially Nvidia's report and AI-related revenue expectations. Emerging-market equities attracted $1.57 billion for the sixth consecutive week, signaling sustained interest in growth.
Not all sectors participated. Financial sector funds saw $1.59 billion walk out the door, a headwind amid rising rate expectations. Gold and precious metals funds pulled in $536 million, reflecting defensive positioning.
Strong Earnings Couldn't Hold
The inflow surge was anchored in solid corporate results. Roughly 90% of MSCI World companies had reported second-quarter results by that point, and combined net income jumped 39.7% year-over-year. That earnings beat gave investors reason to buy.
But earnings alone don't drive markets for long.
Bond funds recorded $15.42 billion in inflows, marking the 20th consecutive week of positive flows, a sign that fixed-income was attracting capital in tandem with equities. The dual inflow pattern suggested investors were hedging—piling into stocks on earnings strength while simultaneously rotating into bonds as yields climbed.
The Selloff
The late-week selloff was driven by rising government bond yields, climbing oil prices, and renewed inflation concerns. It's a familiar pattern in 2024: macroeconomic headwinds trump micro-level earnings beats. Investors who'd committed capital early in the week faced paper losses by Friday. The week's inflow record became a case study in the speed with which sentiment shifts when rates and inflation expectations move.
