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Iran War Triggers March Investment Reversal With Record EM and Gold ETF Outflows

Oil shocks and rate volatility steered money to cash, with India’s retail investors still buying equities.

Overview

  • In March, foreign investors pulled $70.3 billion from emerging market assets, the largest monthly exit since March 2020, with equity selling in Asia leading the drop, according to the IIF.
  • Global gold ETFs saw a record $12 billion monthly outflow in March, led by North American selling, while Asia posted record quarterly inflows with China and India adding to holdings, the World Gold Council reported.
  • UK retail investors withdrew £1.44 billion from equity funds in March, marking a tenth straight month of outflows, as bond funds shed £535 million and money market funds drew £228 million, Calastone data showed.
  • European ETF flows cooled sharply in March, yet energy ETFs drew €1.7 billion as investors bet on higher oil and gas prices, while bond ETFs logged €2.4 billion of outflows, Morningstar said.
  • India broke the pattern as equity mutual funds took in about ₹40,366 crore in March and SIP contributions hit a record ₹32,087 crore, even as total mutual fund assets fell and the industry posted ₹2.39 lakh crore in net outflows due to heavy redemptions from debt and liquid funds tied to quarter-end needs.