World traders proceed to pour cash into fairness funds, shrugging off inflation fears

(Reuters) – Global investors continued to put money into equity funds in hopes of a global economic recovery and vaccine optimism, and to allay concerns about inflation levels.

FILE PHOTO: An almost empty trading floor can be seen on the New York Stock Exchange (NYSE) in New York, USA on May 22, 2020. REUTERS / Brendan McDermid

Equity fund inflows doubled from last week to $ 20.4 billion in the week ended March 10, data from Refinitiv Lipper showed.

However, investors sold global bond funds $ 2.7 billion net as US Treasury yields hit a 1-year high this week.

Chart: Fund flows into global reverse convertibles and money markets –

Meanwhile, investors have also put $ 28.7 billion worth of money into safer money market funds, the data showed.

In equity funds, technology funds saw an outflow for the first time in a year due to rising bond yields. Higher returns lower the present value of future cash flows from growth stocks.

On the flip side, the financial sector saw an inflow of $ 3.14 billion, the largest in eight weeks when investors poured money into cyclical stocks amid growing optimism about a global economic recovery.

Chart: Global bond outflows for the week ending March 10 –

Other sectors that rise and fall along with business cycles, such as industrial, energy and mining companies, also saw inflows this week.

Among the commodity funds, precious metals funds posted net sales of $ 1.74 billion for the fifth consecutive year. This signals that investors are looking to safer assets like gold and are willing to take higher risks.

Graphic: Global Fund Flows into Equity Sectors –

An analysis of 23,755 emerging market funds found that equity funds generated $ 2.3 billion in inflows. Annuity funds recorded net sales of $ 3.4 billion, the largest outflow for the latter in about a year.

Chart: Fund flows into EM stocks and bonds –

Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Adaptation by Larry King