Global equity funds experienced their first weekly outflow in three weeks in the week ending January 7, 2026, as investors reduced risk amid geopolitical tensions, uncertainty over U.S. interest rates, and stretched stock valuations. The move reflects a cautious sentiment in markets following a period of strong inflows, particularly into U.S. equities.

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Net Outflows from Global Equity Funds

According to LSEG Lipper data, global investors withdrew a net $6.07 billion from equity funds—the first weekly net outflow since December 17, 2025. The decline was largely driven by massive sales in U.S. equity funds, highlighting concerns over high valuations and potential volatility in the U.S. market.

Investor caution stems from the Federal Reserve’s policy stance, balancing a softening labor market with still-elevated inflation. Following last month’s rate cut, the central bank signaled that borrowing costs are unlikely to fall further in the near term, contributing to cautious sentiment among equity investors.

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Regional Fund Trends

While U.S. equity funds saw outflows, other regions continued to attract capital:

• European equity funds: Net inflows of $11.98 billion, the largest weekly amount since May 2025.
• Asian equity funds: Net purchases of $4.52 billion.
• Emerging market (EM) equity funds: $3.16 billion inflow, the highest in six weeks.
• EM bond funds: Additional inflows of $1.1 billion.

These trends indicate that investors are diversifying geographically, seeking opportunities outside U.S. equities amid uncertainty.

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Bond and Money Market Fund Flows

Global bond and money market funds also saw significant activity:

• Money market funds: Weekly net purchases of $161.27 billion, the largest weekly inflow since December 2024.
• Bond funds: Net inflows of $17 billion, recovering from a marginal outflow of $865 million the previous week.
• Short-term bond funds: $4.77 billion inflow, reversing a prior $4.89 billion outflow.
• Corporate and euro-denominated bond funds: Net purchases of $1.5 billion and $1.33 billion, respectively.

Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, noted:
“While lower rates may limit income opportunities, quality bonds continue to play a crucial role for yield, diversification, and strategies to boost income.”

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Commodities and Precious Metals Funds

• Gold and precious metals commodity funds saw a modest outflow of $268 million, ending an eight-week streak of net inflows.
• The decline reflects a shift of investor focus back to equities and bonds amid changing macroeconomic conditions.

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Key Takeaways

• Global equity funds experienced a $6.07 billion outflow, first in three weeks.
• U.S. equity funds drove most of the decline due to high valuations and rate uncertainty.
• European, Asian, and emerging market funds saw strong inflows.
• Money market and bond funds continued to attract significant capital, reflecting a defensive strategy.
• Gold and precious metals funds saw a minor outflow, ending an eight-week net inflow streak.