Global bond funds see big outflows in week

April 18, 2022: Global bond funds witnessed massive money outflows in the week to April 13, as investors were worried that the Federal Reserve would start tightening its policy more aggressively to contain rising price pressures, which could slow economic growth.

According to Refinitiv Lipper, global investors shed bond funds worth $14.5 billion in the reported week, compared with $1.15 billion worth of net disposals in the previous week.

The benchmark 10-year U.S. Treasury yield hit a three-year high last week in the wake of hawkish comments from Fed officials.

Meanwhile, data released last week showed that U.S. consumer prices increased by the most in 16-1/2 years in March but underlying pressures moderated as goods prices, excluding food and energy, dropped by the most in two years.

Among regions, U.S. bond funds witnessed massive outflows of $12.57 billion. Investors also sold European and Asian funds of $2.99 billion and $0.42 billion, respectively. Investors offloaded global short- and medium-term bond funds of $6.55 billion and exited high-yield bond funds worth $6.21 billion, marking the biggest outflow in two months.

Meanwhile, inflation-protected funds gained $659 million in a seventh straight week of net buying.

Global equity funds saw net selling of $11.04 billion in their first weekly outflow in four weeks.

Among sectoral funds, financials lost $1.64 billion in a second straight week of outflows, while consumer staples and utilities received inflows of about $0.6 billion each.

In the week, investors drew $40.3 billion out of money market funds after two straight weeks of net buying. In the commodities sector, precious metal funds obtained $1.43 billion in the 13th straight week of inflow. Energy funds, on the contrary, faced outflows worth $120 million.

An analysis of 24,116 emerging market funds showed investors turned net sellers in both equity and bond funds, offloading $340 million and $381 million, respectively.

Reuters