In the week leading up to April 26, investors placed their cash in the relative safety of global money market funds out of concern for a halt in global economic activity, with the recent decline in quarterly earnings of U.S. companies fueling pessimism.
Investors purchased a net $42.68 billion worth of money market funds during the week ending April 26, bringing the total inflows for the year to a staggering $427.4 billion.
During the past week, U.S. and European money market funds received inflows of $47.72 billion and $1.89 billion, respectively. However, Asia-focused funds experienced roughly $90 million in outflows.
Global money market funds receive large inflows.
This year, investors have flocked to U.S. money market funds due to concerns about a recession and the safety of uninsured bank deposits following the failure of two regional banks, including Silicon Valley Bank. In turn, capital has been withdrawn from global equity funds, which are viewed as more vulnerable.
The top three inflowing money market funds for the week were the Morgan Stanley Institutional Liquid Government securities fund, the State Street US Government Money Market Fund, and the Invesco Government & Agency Portfolio Fund. Each received $12.15 billion, $8.1 billion, and $4.6 billion, respectively.
Meanwhile, global equity funds saw a net outflow of $8.89 billion, the largest weekly outflow in four weeks, due to lackluster first-quarter performance.
Investors sold $860 million in technology funds and $441 million in healthcare funds, while financials received a third weekly inflow of $489 million.
Diverse companies’ earnings, including 3M Co, General Motors Co, PepsiCo Inc, United Parcel Service Inc, and McDonald’s Inc, painted a varied picture of corporate profit and outlook.
Global bond funds attracted $3.57 billion in inflows compared to $124 million in net purchases the previous week.
After $1.68 billion in net redemptions the previous week, government bond funds purchased $3.15 billion. After three consecutive weeks of net purchases, investors withdrew $407 million from intermediate- and short-term bond funds.
Among commodities, precious metal funds received $656 million in their largest weekly inflow in three weeks, while energy funds experienced net purchasing of approximately $6 million after three consecutive weeks of net selling.
After four consecutive weeks of net purchases, investors sold $230 million worth of equity funds, according to data for 23,940 emerging market funds. They also liquidated bond funds worth $130 million.