Data processed by “Bank of America” showed that equity funds witnessed small inflows in the past week, as investors reduced their positions in high-growth US stocks while adding some positions in Europe, especially in the financial sector.
Stocks attracted only $1.5 billion, the lowest inflows this year, led by banking and materials stocks, which usually benefit from an inflationary environment. This helped Europe, which attracted $2.7 billion, according to Bank of America, based on EPFR data.
Meanwhile, tech funds saw their fifth consecutive weekly outflow as they are particularly sensitive to expectations of higher interest rates because their value depends heavily on future earnings, which are heavily discounted when interest rates rise.
Fund managers are steadily turning to stocks that typically benefit from higher interest rates, growth and inflation such as banks and energy, which make up a large part of European stock indices. Bank of America said the bonds received $12.5 billion, driven by emerging market debt and investment grade bonds.
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