Global equity funds see outflows on worries over Fed tightening

(Reuters) - Global equity funds witnessed outflows in the week to Feb. 15, hit by worries about the U.S. Federal Reserve's further monetary tightening, with recent data showing stickier-than-expected inflation.

Refinitiv Lipper data showed investors disposed of a net $1.85 billion worth of global equity funds last week, compared with net purchases of $379 million in the previous week.

Rate hike fears increased during the week as reports on consumer prices and retail sales pointed to stubborn inflation and a stronger economy despite higher borrowing costs.

Fund flows: Global equities, bonds and money market https://fingfx.thomsonreuters.com/gfx/mkt/egpbyarxgvq/Fund%20flows-%20Global%20equities%20bonds%20and%20money%20market.jpg

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, hit a three-month high of 4.718 on Friday.

U.S. and Asian equity funds witnessed outflows of $3.5 billion and $310 million, respectively, but investors purchased European funds worth $1.5 billion.

Tech, healthcare, and consumer discretionary sectors suffered $624 million, $408 million and $319 million worth of outflows, respectively.

Meanwhile, weekly inflows into global bond funds slipped to a seven-week low of $2.62 billion.

Fund flows: Global equity sector funds

Investors purchased global government and short- and medium-term bond funds worth $3.2 billion and $2.5 billion, respectively. But they offloaded $3.1 billion of high-yield bond funds, marking the biggest weekly selling since Dec. 21.

Meanwhile, global money market funds saw $13.3 billion worth of net selling, the biggest outflow in eight weeks.

Global bond fund flows in the week ended Feb 15 https://fingfx.thomsonreuters.com/gfx/mkt/xmpjkradzvr/Global%20bond%20fund%20flows%20in%20the%20week%20ended%20Feb%2015.jpg

Demand for commodity funds remained weak during the week as energy funds received just $34 million, the smallest amount in three weeks. Precious metal funds also got just $2 million.

Data for 23,637 emerging market (EM) funds showed that equity funds drew $1.92 billion in a sixth week of net buying, while bond funds faced outflows worth $1.44 billion after seven weekly purchases.

Fund flows: EM equities and bonds

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru;Editing by Sharon Singleton)