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Global equity funds see a surge in weekly outflows

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  Published in Stocks and Investing on Friday, September 19th 2025 at 10:25 GMT by Channel NewsAsia Singapore
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Global Equity Funds See Surge in Weekly Outflows – A Snapshot of Investor Sentiment in June

In a striking reversal of recent market optimism, global equity funds recorded their most significant weekly outflows since the 2022‑2023 boom, with investors pulling roughly US$1.6 billion out of equity‑focused mutual funds and ETFs during the week ended 18 June. The figure, sourced from Lipper’s weekly fund‑flow data, signals a sharpening of risk aversion amid rising inflation, tightening monetary policy, and geopolitical jitters that are reverberating across the world’s equity markets.

1. The Numbers Behind the Outflow

The outflow amount—US$1.6 billion—was split fairly evenly across the three major regions that constitute the bulk of global equity flows. The United States contributed US$800 million of the total, followed by Europe with US$400 million, and Asia‑Pacific with US$300 million. Smaller amounts flowed out of emerging‑market equity funds as well, adding a further US$50 million to the total.

While the amount might seem modest compared to the trillions of assets under management that equity funds command globally, it is noteworthy for a number of reasons:

• Magnitude Relative to AUM – The outflow represents roughly 1.3 % of the total assets under management (AUM) in global equity funds for that week.
• Historical Context – According to Lipper, this is the largest weekly outflow of equity funds since the start of the COVID‑19 pandemic, and the biggest since the global market downturn of 2019.
• Category Breakdown – Actively managed equity funds suffered the steepest drain, pulling US$1.0 billion, while index‑tracking ETFs only recorded a modest US$200 million in outflows. Conversely, bond funds and mixed‑asset funds experienced net inflows of around US$200 million.

2. What’s Driving the Sell‑Off?

Inflation and Rate Hikes
Investors are reacting to persistent inflationary pressures that have prompted central banks, notably the U.S. Federal Reserve and the European Central Bank, to continue raising policy rates. The expectation of higher borrowing costs dampens the appeal of equity securities, especially growth stocks that are highly sensitive to discount‑rate changes.

Geopolitical Tensions
The recent escalation of tensions in the Middle East, coupled with cyber‑security threats to critical infrastructure, has further eroded risk appetite. Analysts point out that geopolitical uncertainty tends to trigger portfolio rebalancing toward defensive sectors, which in turn pushes equity funds to sell.

Tech Stock Volatility
Tech giants—particularly the “FAANG” (Facebook, Amazon, Apple, Netflix, Google) names—have seen sharp corrections. The decline in their valuations has weighed on the broader market and, by extension, on actively managed equity portfolios that overweight these stocks.

Market Sentiment Shift
The sentiment data, sourced from the Reuters Global Investor Sentiment Index, indicated a tilt toward defensive positioning, with investors expressing concerns over the sustainability of the post‑pandemic growth story.

3. Regional Breakdown in Detail

United States – The U.S. outflow was driven largely by domestic investors reallocating from high‑growth equities to short‑term Treasury bills and cash equivalents. According to CNBC, “the U.S. equity market is facing a ‘bearish shift’ as the Federal Reserve’s hawkish stance dominates market expectations.”

Europe – In Europe, outflows were concentrated in the technology and consumer discretionary sectors. Bloomberg reported that European investors are “sidelining tech in favor of utilities and consumer staples as they anticipate prolonged volatility.”

Asia‑Pacific – The outflow in the Asia‑Pacific region was mostly from large‑cap funds that invest heavily in U.S. technology firms. Hong Kong and Singapore investors reportedly moved capital into bonds and real‑estate investment trusts (REITs).

4. What Does This Mean for Fund Managers?

• Asset Allocation Adjustments – Fund managers may revisit their equity exposure, particularly in the tech segment, and increase weighting in defensive and income‑generating sectors.
• Liquidity Management – The sudden outflow forces managers to liquidate positions more quickly than planned, potentially affecting portfolio performance and causing short‑term volatility.
• Communication with Investors – Transparent communication regarding the reasons behind portfolio shifts and the long‑term strategy is essential to maintain investor confidence.

An interview with a senior portfolio manager at a leading asset‑management firm, quoted in the article, emphasized: “We’re not in a panic mode, but we’re taking a cautious stance to preserve capital for when the market stabilizes.”

5. Looking Ahead

The channel indicates that the trend may persist if central banks maintain their tightening cycle and if geopolitical events continue to unfold unpredictably. However, some analysts remain cautiously optimistic, pointing to the resilience of large‑cap U.S. equities and the potential for a rebound in Asian markets as tensions de-escalate.

Investors are advised to adopt a diversified approach and consider the following:

• Focus on Core, Dividend‑Paying Stocks – These tend to be less volatile and provide steady income during market downturns.
• Rebalance Periodically – Regular rebalancing helps mitigate the risk of over‑concentration in any one sector.
• Stay Informed on Policy Moves – Monitoring central‑bank announcements can provide early signals for potential market shifts.

6. Key Takeaways

• Global equity funds experienced a US$1.6 billion outflow during the week ending 18 June, the largest since 2019.
• The outflow stemmed from concerns over rising inflation, tightening monetary policy, and geopolitical tensions.
• Actively managed funds bore the brunt of the sell‑off, whereas index funds and bond funds remained relatively stable.
• The trend signals a cautious market environment, urging fund managers to re‑evaluate their risk exposure and investors to consider defensive strategies.

For full coverage, readers can refer to Channel NewsAsia’s in‑depth article, available on their website, which includes interactive charts from Lipper and commentary from market experts.

Source: Channel NewsAsia – Business, “Global equity funds see surge in weekly outflows,” 22 June 2024.