– Global investors took shelter in safer money market and bond funds in the week to Aug. 4, as the rapidly spreading Delta variant of COVID-19 dampened hopes for a faster recovery from the pandemic, with some economic data already showing signs of a slowdown.
Data from Lipper showed global money market funds attracted inflows of $36.68 billion, the most in 10 weeks.
Global bond funds received $14.6 billion in the week, twice the inflows in the previous week.
Graphic: Fund flows into global equities bonds and money markets – https://fingfx.thomsonreuters.com/gfx/mkt/xmvjogwnqpr/Fund%20flows%20into%20global%20equities%20bonds%20and%20money%20markets.jpg
Bond prices rallied across the world, with the U.S. 10-year Treasury yield touching a six-month low this week.
Data released during the week showed U.S. manufacturing growth slowed for the second straight month in July, while, U.S. private payrolls increased less than expected.
European bond funds attracted $7.4 billion, while U.S. bond funds received $6.7 billion. Asian bond funds also attracted small inflows.
On the other hand, global equity funds received $9.04 billion, helped by some optimism over strong earnings posted by a majority of U.S. firms in the second quarter.
Graphic: Global bond funds’ flows in the week ended Aug 4 – https://fingfx.thomsonreuters.com/gfx/mkt/movanmrqrpa/Global%20bond%20funds’%20flows%20in%20the%20week%20ended%20Aug%204.jpg
However, virus concerns capped equity inflows, as the purchases were 47% lower compared with the previous week.
Chinese equity funds saw inflows for the first time in seven weeks, as concerns over China’s efforts to impose tighter regulations on its publicly traded companies abated slightly.
Across sectors, tech funds secured a net $1.46 billion, while consumer discretionary and health care funds lured over $500 million each.
Graphic: Global fund flows into equity sectors – https://fingfx.thomsonreuters.com/gfx/mkt/myvmnmraypr/Global%20fund%20flows%20into%20equity%20sectors.jpg
Among commodity funds, precious metal funds attracted investments worth $617 million, their first inflow in four weeks. Energy funds saw outflows for a second successive week.
An analysis of 23,738 emerging market funds showed investors bought a net $2.8 billion in equity funds, their biggest purchase in over four months, and sold $190 million in bond funds in the week.
Graphic: Fund flows into EM equities and bonds – https://fingfx.thomsonreuters.com/gfx/mkt/gkvlgmelzpb/Fund%20flows%20into%20EM%20equities%20and%20bonds.jpg