Global equity funds saw their extended streak of weekly inflows come to an abrupt halt, with investors choosing to trim risk exposure in the lead-up to Nvidia's earnings release and a highly anticipated address from the Federal Reserve chair.

Data from LSEG Lipper shows that worldwide equity funds recorded net outflows of $5.7 billion in the week ending August 26, snapping a 13-week run of consecutive inflows and marking the first weekly redemption since May 20. US equity funds bore the brunt of the selling, with net outflows reaching $22.3 billion for the week.

Two key catalysts drove the shift in sentiment: the quarterly results from AI chip giant Nvidia, and the Friday speech by Federal Reserve Chair Kevin Warsh at the Jackson Hole symposium. The market had already been on edge following warnings from three Fed officials about persistently elevated inflation, keeping investors highly attuned to any signals on the direction of monetary policy.

Nvidia earnings boost tech sector while Europe and Asia see inflows

Despite the broader equity fund redemptions, the technology sector continued to attract capital. Nvidia released its earnings on Wednesday, projecting year-over-year revenue growth of roughly 70% for the coming fiscal year, which helped ease some concerns about a slowdown in AI demand, even as supply constraints remain unresolved.

By sector, technology funds recorded net inflows of $3.2 billion for the week, while metals and mining funds drew $489 million. Financials, by contrast, saw net outflows of $948 million.

The regional picture showed clear divergence in capital flows. European equity funds attracted net inflows of $7.92 billion, with Asian equity funds adding $4.8 billion, both posting sizeable gains against the trend and standing in sharp contrast to the substantial outflows from US equity funds.

Bond fund inflows moderate, short-duration products stay in demand

Global bond funds posted net inflows of $10.25 billion for the week, the lowest level in four weeks, yet short-term bond funds remained a favored destination, pulling in $6.29 billion to mark a seven-week high. This underscores investor preference for lower-duration assets during a period of heightened uncertainty.

Euro-denominated bond funds attracted $1.09 billion in net inflows for the week. High-yield bond funds, however, recorded net outflows of $1.77 billion, the first weekly redemption since July 29, signaling a rise in risk aversion toward credit.

Money market funds break four-week streak, gold funds hit six-month high

Money market funds saw net outflows of $19.74 billion for the week, ending a four-week run of consecutive inflows.

In commodities, gold and other precious metals funds attracted net inflows of $4.21 billion, reaching a six-month high, as safe-haven demand escalated amid a more cautious market mood. Energy funds logged their second consecutive week of outflows, with redemptions totaling $313 million.

Emerging markets resilience continues with seventh straight week of inflows

Emerging market assets showed relative strength through this bout of volatility. Based on data covering 28,976 funds, emerging market equity funds recorded net inflows of $709 million for the week, marking a seventh consecutive week of inflows. Emerging market bond funds added $956 million in net inflows over the same period, extending the recent trend of capital accumulation.