International investors pulled money out of stock funds for the first time in two months during the week ending March 4, as escalating tensions between the U.S., Israel and Iran sparked concerns about inflation and reduced appetite for riskier investments.
According to data from LSEG Lipper, U.S. stock funds experienced the largest withdrawals, with investors pulling out $21.92 billion – the most significant exodus since January 7. This led to overall global stock fund outflows of approximately $1.44 billion.
The escalating Middle East situation has raised concerns about potential oil price spikes, putting pressure on stock markets and increasing worries about inflation and possible delays in interest rate reductions.
The MSCI World Index is heading toward its worst weekly performance since early April 2025, dropping more than 2.5% this week.
European stock funds continued to attract investment but at a slower pace, bringing in $8.8 billion compared to roughly $11.88 billion the week before. Asian funds drew $7.43 billion in new investments.
Looking at specific sectors, industrial and energy funds received $2.53 billion and $1.21 billion in new money respectively, while financial sector funds experienced outflows of about $1.9 billion.
Demand for safer investments drove money market fund inflows to $20.22 billion, similar to the previous week’s levels.
Bond funds remained popular for the ninth consecutive week, attracting $16.12 billion in new investments globally.
Short-term bond funds saw particularly strong interest, with inflows jumping to $3.62 billion from about $1.23 billion the previous week. Euro-denominated and corporate bond funds also performed well, drawing $2.31 billion and $2.09 billion respectively.
However, investors moved away from gold and precious metals funds, withdrawing approximately $2.62 billion in their second weekly selloff in eight weeks.
In developing markets, stock fund investments cooled to an eight-week low of $5.3 billion. Bond fund purchases in these markets also slowed to $2.5 billion from roughly $3.04 billion the previous week, according to data covering 28,803 funds.
