Global Equity Funds Post First Outflow in Eight Weeks

Global equity markets experienced their first weekly net outflow in two months as geopolitical tensions in the Middle East rattled investor confidence. The escalating conflict involving the United States, Israel, and Iran has sparked significant concerns regarding global inflation and the future path of interest rates.

According to data from LSEG Lipper, global equity funds recorded a net withdrawal of approximately $1.44 billion during the week ending March 4. The United States bore the brunt of the sell-off, with equity funds in the region shedding $21.92 billion, marking the largest weekly outflow since early January.

The widening regional conflict has fueled fears of a potential supply shock for Brent Crude Oil, which could further complicate the global inflationary outlook. These anxieties weighed heavily on the MSCI World Index, which is currently tracking its weakest weekly performance since April 2025, having declined by more than 2.5%.

While the United States saw heavy outflows, other regions remained positive but showed signs of slowing. European equity fund inflows moderated to $8.8 billion, down from $11.88 billion the previous week, while Asian funds attracted $7.43 billion. On a sectoral basis, industrial and energy funds drew $2.53 billion and $1.21 billion respectively, whereas the financial sector faced outflows of roughly $1.9 billion.

As risk appetite diminished, investors sought refuge in safer assets. Money market funds recorded $20.22 billion in net inflows, maintaining a steady pace of demand. Global bond funds also remained a popular choice, attracting $16.12 billion for their ninth consecutive week of gains. Notably, short-term bond funds saw a sharp increase in demand, with inflows rising to $3.62 billion from $1.23 billion a week earlier. Euro-denominated and corporate bond funds also attracted significant interest, totaling $2.31 billion and $2.09 billion respectively.

Despite the geopolitical uncertainty, Gold and other precious metals saw their second weekly net sale in eight weeks, with investors pulling out approximately $2.62 billion. Emerging market equity funds also experienced a cooling trend, with inflows hitting an eight-week low of $5.3 billion, while bond fund purchases in these markets eased to $2.5 billion.