Global equity funds ended 13 weeks of net inflows: investors withdrew $5.9 billion in a single week, with US equity funds experiencing outflows of $22.3 billion.

The continuous inflow of funds into global equity funds came to an abrupt halt last week. Amid the dual uncertainties of Nvidia's earnings report and the Federal Reserve Chairman's speech, investors opted to proactively reduce their risk exposure.

According to LSEG Lipper data, global equity funds recorded a net outflow of $5.7 billion in the week ending August 26, ending a 13-week streak of net inflows and marking the first weekly net redemption since May 20. US equity funds were the most affected, with a net outflow of $22.3 billion in the week.

The shift in market sentiment was triggered by two main factors: first, the quarterly earnings report from AI chip giant Nvidia, and second, Federal Reserve Chairman Kevin Warsh's scheduled speech at the Jackson Hole symposium on Friday. Previously, three Fed officials had warned of persistently high inflation, keeping the market highly vigilant about the direction of monetary policy.

Nvidia's earnings report boosted the technology sector, with European and Asian funds flowing in against the trend.

Despite net redemptions across equity funds, the technology sector remained favored by investors.

Nvidia released its earnings report on Wednesday, predicting that revenue will grow by about 70% year-over-year in the next fiscal year, which to some extent alleviated market concerns about a slowdown in AI demand, although supply bottlenecks have not been completely eliminated.

Looking at different sectors, technology funds saw a net inflow of $3.2 billion this week, while metals and mining funds attracted a net inflow of $489 million; the financial sector, on the other hand, recorded a net outflow of $948 million.

In terms of regional distribution, fund flows showed a clear divergence. European equity funds saw a net inflow of $7.92 billion this week, while Asian equity funds saw a net inflow of $4.8 billion. Both recorded substantial inflows against the trend, in stark contrast to the large net outflows from US equity funds.

Inflows into bond funds have slowed, but short-term bonds remain popular.

Global bond funds saw net inflows of $10.25 billion this week, a four-week low, but short-term bond funds remained popular with investors, seeing net inflows of $6.29 billion, a seven-week high , reflecting the market's preference for low-duration assets in an uncertain environment.

Euro-denominated bond funds saw a net inflow of $1.09 billion this week; high-yield bond funds, on the other hand, recorded a net outflow of $1.77 billion, marking the first weekly net redemption since July 29, reflecting a growing aversion to credit risk among investors.

Money market funds ended a four-week winning streak, while gold inflows hit a six-month high.

Money market funds saw a net outflow of $19.74 billion this week, ending four consecutive weeks of net inflows.

In commodities, gold and other precious metals funds saw net inflows of $4.21 billion this week, a six-month high, indicating a significant increase in safe-haven demand amid cautious market sentiment. Energy funds, however, recorded net outflows for the second consecutive week, amounting to $313 million.

Emerging markets continue to see capital inflows, marking the seventh consecutive week of net buying.

Emerging market assets have shown relative resilience during this period of volatility. Data covering 28,976 funds shows that emerging market equity funds saw net inflows of $709 million this week, marking the seventh consecutive week of net inflows; emerging market bond funds saw net inflows of $956 million during the same period, continuing the recent trend of capital inflows.

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