Global equity funds draw second week of inflows as AI spending outlook supports risk appetite

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Highlights

Global equity funds saw $34.76 billion in net inflows for the week through September 30, driven by optimism over AI investment and moderating U.S. inflation.
U.S. equity funds attracted $20.6 billion in inflows, European $6.19 billion, and Asian $6.16 billion, while emerging market equities lost $1.37 billion for a fourth consecutive week.
Money market funds experienced $116.52 billion in outflows, the largest weekly withdrawal since April 15, while technology sector funds saw $2.63 billion in net outflows.

Fund flows reflect AI and inflation backdrop

As reported by Reuters, citing LSEG Lipper data, global equity funds record net inflows of $34.76 billion in the week through September 30, marking a second straight week of gains for the asset class.

Risk appetite is supported by optimism over AI-related investment. Micron Technology says quarterly revenue is set to come in above estimates, signaling strong demand for memory chips used in AI applications.

Goldman Sachs says the largest U.S. hyperscalers are on track to spend about $800 billion on capital expenditure in 2026, with consensus forecasts pointing to $1.1 trillion in 2027. The bank adds that strong revenue backlogs, supply constraints and sharply accelerating cloud revenue growth among major providers continue to support investment.

A U.S. Commerce Department report also helps sentiment after showing inflation rises less than expected in August, while July price pressures are more moderate than first reported. That eases pressure on the Federal Reserve to raise rates again in October.

Regional and asset-class shifts shape allocations

U.S. equity funds attract $20.6 billion for a second consecutive week, while European and Asian equity funds post inflows of $6.19 billion and $6.16 billion, respectively. Emerging market equity funds, by contrast, remain under pressure with $1.37 billion in outflows for a fourth straight week.

Sector funds post net outflows of $919.7 million as investors pull $2.63 billion from technology funds after three weeks of buying. Financial funds draw $1.13 billion and utility funds take in $468 million.

Global bond funds register a second week of inflows at $4.76 billion, although that is down sharply from $9.24 billion a week earlier. Short-term and government bond funds still attract $5.43 billion and $4.13 billion, while high-yield bond funds see $2.29 billion in outflows.

Money market funds post net outflows of $116.52 billion, the largest weekly withdrawal since April 15. In commodities, gold and precious-metals funds attract $275.2 million, their smallest inflow in three weeks, while energy funds record $559 million in outflows after inflows of $89.3 million in the previous week.

Investors also withdraw a net $1.75 billion from emerging market bond funds, based on data covering 29,099 funds.

Our earlier article on euro zone AI investment funding highlighted that many companies plan to finance AI projects mainly with internal cash flow and retained earnings, with limited use of bank loans or capital markets. We noted that this reliance on balance sheets reflects structural hurdles in accessing external financing for intangible AI investments, contrasting with the far larger, debt-supported spending plans seen among leading U.S. hyperscalers.

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