Investors maintain confidence, marking the ninth consecutive week of inflows into global equity funds, driven by strong corporate earnings in the third quarter. Despite concerns over high valuations in the tech sector and ongoing market volatility, data from LSEG Lipper shows a modest increase in net purchases, with investors adding $4.43 billion during the week ending November 19, up slightly from $4.39 billion the previous week.
This sustained momentum persists even as major indices, such as the MSCI World Index, experienced pressure, reaching a two-and-a-half-month low amidst uncertainties surrounding U.S. interest rate policies and valuation debates. Nonetheless, the consistent inflows signal that investors are prioritizing recent earnings surprises over short-term market volatility.
In particular, U.S. equity funds remain a key driver, with inflows reaching $4.36 billion, up sharply from roughly $965 million the prior week. Large-cap funds attracted nearly $7 billion, reflecting strong investor preference for well-established companies amid earnings optimism, while small-cap funds experienced modest inflows and mid-cap funds saw some outflows, illustrating a nuanced risk appetite across market segments.
International markets present a mixed picture: Asian equity funds recorded net inflows of approximately $130 million, signaling cautious optimism, whereas European equity funds experienced outflows totaling around $6 billion. Meanwhile, emerging markets continue to attract consistent inflows, with a net addition of $2.05 billion, even though bond funds in these regions faced some divestment.
Sector-wise, investor rotation is evident. Healthcare led with a record $2.46 billion in inflows, its largest since at least 2022, highlighting its defensive appeal amid volatile conditions. Conversely, the consumer discretionary and technology sectors experienced net outflows of $1.12 billion and $895 million, respectively, reflecting profit-taking and valuation concerns.
Bond markets remain robust, with global bond funds attracting $10.55 billion—the 31st straight week of inflows. Short-term bond funds saw $4.76 billion in new investments, alongside continued interest in government and euro-denominated bonds, pointing to a diversification strategy amid economic uncertainties. Meanwhile, money market funds experienced outflows totaling $7.51 billion for a second week, as investors seek higher yields elsewhere.
Despite some index declines, such as the S&P 500 dropping to 6,534.05 amid technology selloffs and ambiguous labor data, the underlying earnings growth remains compelling. Third-quarter earnings surged 16.3% year-on-year, exceeding expectations and supporting ongoing fund inflows as investors look to longer-term opportunities.
Overall, recent investor activity underscores a careful balancing act, favoring healthcare and emerging markets while remaining cautious in high-valuation sectors like technology and consumer discretionary. This pattern highlights a diversified approach, combining stable sectors with selective risk exposure, especially in emerging markets and fixed income. The current environment demonstrates how corporate earnings continue to anchor investor confidence amid a landscape of interest rate and inflation uncertainties, with bond inflows serving as a vital risk management tool.
