Drop in stocks attracts entry into global funds for the 3rd consecutive week

Global equity funds attracted inflows for the third consecutive week, as investors took advantage of the market decline to increase exposure to technology stocks, expecting the AI-driven appreciation to continue.

Investors bought a net $3.32 billion worth of global equity funds in the week ending June 10, compared with $21.12 billion in net investments the previous week, according to data from LSEG Lipper.

"For investors who may have allocated fewer resources to the AI supply chain than necessary, we believe one-off additions in downturns can make sense," said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note released earlier this week. "Underlying indicators of demand for AI remain firm."

The MSCI World index fell as much as 4.8% from its all-time high of 1,138.3 last week but has since recovered about 2.3% as hopes for a peace deal between Iran and the United States renew.

European and Asian funds recorded weekly net inflows of US$6.74 billion and US$6.37 billion, respectively. American funds, however, recorded net outflows of US$12.57 billion, the first weekly net sales in three weeks.

Technology funds attracted $7.05 billion in their tenth consecutive week of capital inflows. The financial and industrial sectors attracted US$624 million and US$545 million, respectively.

Global bond funds recorded weekly net inflows of $18.27 billion as investors extended their buying streak to 10 weeks.

Investors pumped $6.7 billion into short-term bond funds, the biggest weekly inflow in three weeks, along with $3.21 billion into medium-term dollar bond funds and $2.26 billion into euro bond funds.

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Money market funds recorded net outflows of US$18.21 billion, reversing the trend of significant inflows of US$154.64 billion in the previous week.

Investors also dumped a net $1.86 billion in gold and other precious metals funds, marking the fourth consecutive weekly outflow.

Emerging markets came under pressure, with investors dumping a net balance of US$944 million in bond funds and US$3.4 billion in equity funds, recording the seventh consecutive weekly outflow, according to data covering a total of 28,937 funds.

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Source: CNN