Global equity funds faced a second consecutive week of outflows, driven by Trump’s tariff threats and rising bond yields.
Amid renewed tariff threats by the U.S. President and rising long-term bond yields, global equity funds recorded a second straight week of capital outflows. The latest data reflects growing investor risk aversion and a shift toward safer asset classes amid heightened market uncertainty.
🔹 Two Straight Weeks of Outflows from Global Equity Funds
In the week ending May 28, 2025, global equity funds saw a net capital outflow for the second consecutive week. According to data from LSEG Lipper, investors pulled a total of $7.52 billion from equity funds, following the previous week’s $9.48 billion in outflows.
🔹 Trump’s Tariff Threats Shake Market Confidence
Market sentiment was shaken by an unexpected announcement from U.S. President Donald Trump, who declared a 50% tariff on European Union imports effective June 1. Though the decision was later postponed to July 9 following a call with European Commission President Ursula von der Leyen, the initial shockwaves had already impacted investor confidence.
🔹 Asian Markets Face Heavy Selling Pressure
Asian equity markets bore the brunt of the turmoil, with regional funds experiencing $6 billion in capital outflows—their highest since August 2018. The data highlights the region’s sensitivity to geopolitical and trade-related developments.
🔹 Divergent Trends in U.S. and European Fund Flows
U.S. equity funds recorded outflows of $5.46 billion during the week. In contrast, European equity funds posted net inflows of $3.64 billion, marking the seventh consecutive week of capital inflows. This indicates a relatively more optimistic investor outlook toward the European market.
🔹 Robust Inflows into Bond Funds
Bond funds continued to draw strong investor interest, attracting $15.27 billion in net inflows for the week—extending a six-week winning streak. U.S., European, and Asian bond funds received $6.98 billion, $6.23 billion, and $1.27 billion, respectively.
🔹 Safe-Haven Demand Drives Government and High-Yield Bonds
Government bond funds and high-yield bond funds attracted $1.9 billion and $1.51 billion, respectively. This reflects a growing preference among investors for lower-risk, income-generating assets amid market turbulence.
🔹 Money Market Sees Sharp Reversal; Gold Funds Rebound
Money market funds saw a sharp reversal from the previous week’s inflows, with investors withdrawing $36.52 billion. Meanwhile, gold and precious metals funds saw $1.3 billion in inflows, ending a five-week streak of outflows—underscoring renewed demand for safe-haven assets.
🔹 Emerging Markets Show Relative Stability
Emerging market equity fund outflows slowed to $183 million, significantly down from $1.4 billion the week prior. Bond funds in emerging markets attracted $885 million, marking their fifth consecutive week of inflows.
🔹 Summary
Recent global market trends underscore investor sensitivity to geopolitical and economic developments. With rising bond yields, aggressive tariff rhetoric, and overall market volatility, investors continue reallocating capital toward lower-risk instruments such as bonds and gold in search of stability and protection.
