Global equity funds lure big inflows as Omicron fears ease – Lipper

Global equity funds drew massive inflows for a second week in the seven days to Dec. 29 as investors welcomed signs that the economic impact from the spread of the Omicron COVID-19 variant would not be as significant as feared.

The funds pulled in US$30.08 billion in net buying, compared with purchases of US$35.83 billion in the previous week, which was their largest weekly inflow in nine months.

Graphic: Fund flows: Global equities bonds and money market-https://fingfx.thomsonreuters.com/gfx/mkt/jnvwejejgvw/Fundper cent20flows-per cent20Globalper cent20equitiesper cent20bondsper cent20andper cent20moneyper cent20market.jpg

The MSCI’s global equity index gained 4.3per cent in a seven-day rally up to Dec. 29 as investors cheered signs that Omicron is less likely to lead to hospitalization, and that some vaccines are effective against the variant.

Sentiments were also boosted by signs that governments are trying to limit economic damage by relaxing rules on isolation and delaying COVID curbs, rather than resorting to lockdowns.

U.S. equity funds secured US$19.43 billion in net buying, while European and Asian funds attracted US$5.62 billion and US$1.44 billion respectively.

Among equity sector funds, financials received US$1.3 billion in net buying, the most in 10 weeks, and healthcare attracted US$332 million, although consumer staples, utilities and tech funds saw outflows of US$380 million, US$338 million and US$285 million respectively.

Graphic: Fund flows: Global equity sector funds-https://fingfx.thomsonreuters.com/gfx/mkt/akvezezeqpr/Fundper cent20flows-per cent20Globalper cent20equityper cent20sectorper cent20per cent20funds.jpg

Investors purchased global bond funds of US$10.79 billion, their biggest net buying in eight weeks.

Global high-yield funds pulled in US$2.64 billion in net buying, the biggest inflow in seven weeks, while corporate bond funds drew US$1.74 billion and inflation-linked funds US$875 million.

Meanwhile, purchases in government bond funds dropped 51per cent from the previous week to US$1.88 billion.

Graphic: Global bond fund flows in the week ended Dec 29-https://fingfx.thomsonreuters.com/gfx/mkt/klpykqkqmpg/Globalper cent20bondper cent20fundper cent20flowsper cent20inper cent20theper cent20weekper cent20endedper cent20Decper cent2029.jpg

Global money market funds witnessed their first weekly net purchase in three weeks, worth US$37.82 billion.

Within commodity funds, energy funds saw outflows of US$81 million, marking a third straight week of net selling, while precious metal funds faced marginal outflows of US$2 million. An analysis of 24,066 emerging market funds showed equity funds attracted US$2.18 billion, their largest weekly inflow in over two months, while bond funds received US$386 million, the first inflow in three weeks.

Graphic: Fund flows: EM equities and bonds-https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwjwjopo/Fundper cent20flows-per cent20EMper cent20equitiesper cent20andper cent20bonds.jpg

(Reporting by Gaurav Dogra in Bengaluru; Editing by Jan Harvey)