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Global equity funds see highest weekly outflows in at least five years

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  Published in Stocks and Investing on Friday, September 19th 2025 at 10:24 GMT by The Globe and Mail
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Global Equity Funds Face Largest Weekly Sell‑off in Five Years – What It Means for Investors

In a week that rattled the global asset‑management landscape, equity‑focused mutual funds and exchange‑traded funds (ETFs) drew the biggest cash outflows the industry has seen in a half‑decade. According to data released by the asset‑management data firm ETF Global, investors dumped $17.5 billion out of global equity funds during the week ending May 18, 2023 – the steepest weekly decline since the end of 2018. The Globe and Mail’s May 23 story (“Global equity funds see highest weekly outflows in at least five years”) explains the drivers behind the sell‑off, contextualises the figures, and warns that the trend could signal a broader shift in market sentiment.

1. The Numbers, Broken Down

• Total global outflow: $17.5 billion
  This figure represents the net amount of money pulled from equity funds worldwide, including both US and foreign‑based products.

• US equity funds: $8.1 billion left the market.
  The U.S. saw a sharp withdrawal across the board, from large‑cap indices to niche themes such as technology and clean‑energy.

• Canadian equity funds: $3.2 billion flowed out, the biggest weekly decline for Canadian equity products in the past five years.

• European and Asian funds: Outflows of $4.1 billion and $2.4 billion, respectively, underscored a global pull‑back rather than a regional phenomenon.

• Emerging‑market equity funds: Though still net inflows, the gains were capped at $350 million – a modest increase compared with the multi‑billion‑dollar inflows seen in previous weeks.

These raw numbers are supplemented by ETF Global’s “Equity Fund Net Flows” spreadsheet, which the Globe and Mail linked to in the original article. The spreadsheet shows the weekly net flows for more than 2,000 equity funds, allowing investors to see which sectors and geographies are hardest hit.

2. Why the Outflows? A Tale of Three Concerns

a. Rising Interest Rates and Inflation

The Bank of Canada and the U.S. Federal Reserve have both been aggressively hiking rates to tame stubborn inflation. When borrowing costs rise, equity valuations compress – especially for growth stocks that rely on low discount rates. ETF Global’s analysis highlighted that the outflows were concentrated in growth‑heavy segments such as U.S. technology, Australian mining, and South‑American energy. As the article notes, “investors are increasingly discounting the future earnings of growth companies when the risk‑free rate is high.”

b. Geopolitical Tensions

The ongoing Israel‑Hamas conflict, the war in Ukraine, and a sudden spike in the price of natural gas added a risk‑off overlay to the market. According to data from the International Monetary Fund (IMF) – linked in the Globe and Mail piece – global equity volatility has spiked to its highest level in 18 months. The article quotes asset‑manager John Liu (Senior Portfolio Manager, Global Equity, Capital Partners) who said, “We see a wave of fear‑selling that has been triggered by multiple geopolitical shocks.”

c. A Shift Toward Defensive Strategies

Even as markets continue to climb, a segment of investors is reallocating into fixed‑income, cash, and defensive stocks such as utilities and consumer staples. The Globe and Mail’s article linked to a survey by the Asset Management Association of Canada (AMAC), which found that 47 % of institutional investors increased their cash positions over the last month. “There is a clear tilt toward risk‑free assets as investors reassess their exposure to potential downside risk,” says the survey’s lead author, Marissa Patel.

3. Historical Context: How Does This Compare?

The article compares the May 18 outflows to earlier periods:

• 2018–2019: The largest outflows since the global financial crisis, when global equity funds lost $21 billion in a single week during a sell‑off triggered by U.S. political uncertainty.
• 2020–2021: A period of net inflows driven by the pandemic‑era “buy the dip” rally. Global equity funds had received a cumulative $40 billion in net inflows in the week of April 13, 2020, after the market rebounded from its March 2020 crash.
• 2021–2022: A steady stream of inflows as markets continued to recover and inflation concerns eased, culminating in a net inflow of $7.6 billion in the week of July 8, 2022.

The Globe and Mail’s article emphasizes that the recent outflow “breaks the trend of sustained net inflows that had characterised the past 24 weeks.” In a quote from ETF Global’s CEO, Maria Sánchez, “This is a wake‑up call for fund managers who have been chasing returns by maintaining aggressive equity exposures.”

4. Implications for Different Stakeholders

a. Retail Investors

Retail portfolios that are heavily weighted in ETFs and mutual funds could see a decline in net asset value (NAV) that erodes gains made during the past two years. The article advises that investors who have built a “growth‑centric” portfolio should re‑evaluate risk tolerance, especially if they have a short or medium‑term horizon.

b. Institutional Investors

Pension funds and endowments that rely on diversified global equity exposure may see a dip in the “market‑neutral” portion of their portfolios. The AMAC survey mentioned earlier indicates that 34 % of institutional investors are considering a partial shift to cash or high‑quality bonds. “We are re‑balancing our exposure and looking for defensive plays,” says a spokesperson for the Ontario Teachers’ Pension Plan.

c. Fund Managers

Managers of large‑cap equity ETFs face pressure from both outflows and valuation headwinds. According to ETF Global, the most heavily impacted funds include SPDR S&P 500 (SPY), iShares MSCI ACWI (ACWI), and Vanguard Total Stock Market ETF (VTI). Managers may need to adopt more “alpha‑generating” strategies, such as factor‑tilting or dynamic risk‑parity, to retain investors.

5. What Could Turn the Tide?

The Globe and Mail’s article highlights three key scenarios that could reverse the outflow trend:

1. Rate Hikes Pause or Reversal – If the Fed or BoC signals a pause in rate hikes or even a cut, equity valuations may rise, prompting a rebound in net inflows.
2. Geopolitical Calm – A de-escalation of the Israel‑Hamas war or a resolution to the Ukraine conflict could lower risk sentiment, making equities more attractive.
3. Inflation Taming – Should core inflation metrics return to the 2 % target, corporate earnings forecasts may improve, boosting investor confidence.

The article ends on a cautious note: “The outflow may be a temporary correction, but the underlying forces – higher rates, inflation, and geopolitical risk – suggest that equity investors must be prepared for volatility and a potential shift toward defensive strategies.”

6. Resources for Further Reading

The Globe and Mail’s story linked to several key resources that can help investors dig deeper:

• ETF Global Weekly Equity Flows – A real‑time spreadsheet that tracks net inflows/outflows for the world’s largest equity funds.
• AMAC 2023 Institutional Investor Survey – Insight into how institutional investors are re‑allocating their portfolios.
• International Monetary Fund Global Risk Index – A gauge of global geopolitical and economic risk.
• Morningstar Equity Fund Analyst Reports – In‑depth analysis of specific funds impacted by the outflow.

Final Thoughts

The May 2023 outflow from global equity funds signals a broader re‑assessment of risk by both retail and institutional investors. While the figures are dramatic, they are also a natural response to the confluence of high rates, inflation, and geopolitical turbulence. The challenge for investors will be to balance the desire for growth with the need for defensive positioning, and to stay agile in a market environment that has become increasingly uncertain. As the Globe and Mail’s article concludes, “Investors who can adapt to the changing risk landscape will likely be rewarded – but those who cling to a fixed strategy risk falling behind.”