October 17, 2025 — Global equity funds witnessed their fourth straight week of inflows through October 15, fueled by growing expectations that the U.S. Federal Reserve will deliver an interest rate cut later this month. The dovish signals from Fed Chair Jerome Powell bolstered investor confidence and renewed optimism in global markets despite lingering geopolitical tensions.
According to LSEG Lipper data, investors pumped a net $2.17 billion into global equity funds during the week, maintaining the robust pace of nearly $2 billion in inflows seen the previous week.
Fed Rate-Cut Expectations Drive Market Optimism
Market participants reacted positively to Powell’s latest comments, which suggested that the Federal Reserve is preparing to ease monetary policy after months of tight financial conditions. The potential rate cut has been viewed as a lifeline for equity markets, which have faced headwinds from inflation, trade policy uncertainty, and slowing global growth.
“Powell’s remarks reinforced hopes that the Fed is pivoting toward a more accommodative stance,” said one strategist. “That’s been enough to sustain buying momentum across major global equity markets.”
However, investor sentiment remained cautious amid renewed U.S.-China trade tensions following President Donald Trump’s statement indicating possible curbs on trade ties with Beijing, underscoring the fragility of the current optimism.
Regional Trends: U.S. and Asian Funds Lead, Europe Sees Outflows
The breakdown of flows by region revealed clear contrasts:
- U.S. equity funds attracted nearly $1 billion in fresh inflows.
- Asian equity funds recorded a similar $1 billion net investment, driven by renewed confidence in export-led economies.
- In contrast, European equity funds suffered $1.62 billion in outflows, ending a 10-week streak of net inflows.
Analysts attributed Europe’s reversal to persistent economic stagnation, energy price volatility, and uncertainty surrounding trade and fiscal policies.
Sectoral Funds See Strong Surge in Tech and Healthcare
Global sectoral equity funds experienced a surge in demand, drawing $6.61 billion in inflows — a 50% increase from the prior week’s $4.39 billion.
Leading the charge were:
- Technology sector funds, which attracted $1.91 billion, driven by the ongoing AI investment boom and robust Q3 earnings from major U.S. tech firms.
- Healthcare funds, which saw $1.38 billion in inflows amid rising global focus on biotech innovation and pharmaceutical demand.
This marks a clear trend of investors rotating toward high-growth, defensive sectors as a hedge against economic volatility.
Global Bond Fund Inflows Ease but Government Bonds Shine
While overall global bond fund inflows slowed to a 16-week low at $7.97 billion, interest in government bond funds surged to its highest level in five months, drawing $3.22 billion.
Short-term bond funds also attracted $2 billion, reflecting a preference for lower-duration assets amid policy uncertainty. In contrast, loan participation funds experienced $1.08 billion in outflows, signaling reduced appetite for higher-risk credit exposure.
This shift underscores a growing demand for safety and stability as investors brace for potential market volatility heading into late 2025.
Money Market Funds See Outflows; Gold Funds Extend Gains
Money market funds recorded $6.72 billion in outflows, as investors partially unwound the $64.46 billion they had added the previous week. Analysts suggest that this move reflects profit-taking and rotation back into risk assets amid optimism surrounding the Fed’s expected rate cuts.
Meanwhile, gold and precious metals funds attracted $2.83 billion, marking their 20th inflow in 21 weeks. Continued uncertainty around global trade and inflation expectations has kept demand for safe-haven assets elevated.
Emerging Markets Face a Setback
In emerging markets, investors broke an eight-week buying streak, withdrawing $1.04 billion from equity funds amid concerns over currency volatility and slower Chinese growth.
However, emerging market bond funds continued to perform well, drawing $2.38 billion in weekly inflows as investors sought higher yields and diversification opportunities.
This split underscores a cautious but selective approach to EM investing — avoiding volatile equities while favoring fixed-income stability.
Outlook: Market Eyes Fed Decision and Trade Developments
Looking ahead, analysts expect the Fed’s upcoming policy decision to remain the key driver of market direction. A confirmed rate cut could trigger a fifth consecutive week of inflows into global equity funds, though trade uncertainties and regional economic disparities may temper enthusiasm.
“Global investors are walking a fine line between optimism and caution,” said a financial strategist at LSEG. “If the Fed follows through with easing, equities should continue to benefit — but volatility will persist given the geopolitical backdrop.”
Key Highlights:
- Global equity funds drew $2.17 billion in inflows — fourth straight weekly gain.
- Fed Chair Jerome Powell’s dovish remarks fueled expectations of a rate cut.
- U.S. and Asian funds attracted inflows; European funds saw $1.62 billion outflows.
- Tech ($1.91B) and healthcare ($1.38B) sectors led equity fund investments.
- Bond fund inflows slowed to $7.97B, while gold funds extended a strong 2025 trend.
- Emerging market equities faced outflows, but EM bonds remained resilient.
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