Global Equity Funds Draw Inflows for Second Week as AI Optimism Holds

Investors bought global equity funds for the second week in a row as optimism over artificial intelligence (AI) bodes well for equities, taking them $34.76 billion in the week ended September 30, latest LSEG Lipper data showed. A drop from $44.31 billion in the prior week.

Demand from investors was encouraged by hopes that some of the largest tech firms will keep pouring cash into AI capacity. Micron Technology has just predicted quarterly sales above consensus estimates, indicating solid demand for the memory chips that power AI. Goldman Sachs projects that U.S. hyperscalers will spend roughly $800bn on capex in 2026 with consensus projections of $1.1tn in 2027.

U.S. equity funds led the way with $20.6 billion of the global inflow, while European equity funds and Asian equity funds saw net inflows of $6.19 billion and $6.16 billion respectively. While elevated bond yields were a concern, they did not seem to have an impact on overall investor appetite.

The softer U.S. inflation reading also helped underpin risk appetite. Commerce Department data showed inflation rose less than forecast in August and previous July price pressures were revised down. The report dented bets that the Federal Reserve would hike borrowing costs again in October.

Across the board, those investors narrowing down sector focus were less inclined. Sector equity funds experienced $919.7 million of net outflows, including $2.63 billion pulled out of technology funds after three weeks of inflows. Financial sector funds garnered $1.13 billion; utility sector funds had $468 million.

Bond funds again saw flows, with $4.76 billion going into the funds for a second week in a row. Short-term bond funds attracted $5.43 billion and government bond funds had $4.13 billion of inflows but high-yield bond funds saw $2.29 billion of outflows.

Elsewhere, the panoply of money market funds experienced a record outflow of $116.52 billion-its largest weekly outflow since April 15. Emerging-market equity funds saw a fourth straight week of outflows, totaling $1.37 billion; and emerging-market bond funds experienced outflows of $1.75 billion.

The recent fund-flow numbers imply that AI optimism is still underpinning global equity inflows, but investors appear to be cautious about interest rates, bond yields and the risk of regional downturns.