Global investors pulled money out of equity funds for the first time in eight weeks as the escalating Iran conflict raised concerns about inflation, oil prices, and interest rates.

Data from LSEG Lipper shows that investors withdrew around $1.44 billion from global equity funds in the week ending March 4. The shift reflects rising caution in financial markets as geopolitical tensions in the Middle East intensify.

US Funds Lead the Outflows

The biggest withdrawals came from US equity funds, which saw nearly $21.9 billion in net outflows, the largest weekly withdrawal since early January.

The growing conflict involving the US, Israel, and Iran has triggered fears that rising oil prices could reignite inflation and delay expected interest rate cuts from central banks.

As a result, investors have become more cautious about stock markets.

The MSCI World Index, which tracks global equities, is now heading toward its worst weekly decline since April 2025, falling more than 2.5% this week.

Europe and Asia Still Attract Money

Despite global caution, some regions continued to see investment inflows.

• European equity funds received about $8.8 billion
• Asian equity funds attracted roughly $7.4 billion

However, these inflows were smaller than the previous week, showing that investor confidence is weakening.

Investors Shift Toward Defensive Assets

With uncertainty rising, investors are increasingly moving money into safer assets.

Global money market funds, which are considered low risk investments, received about $20.2 billion in inflows during the week.

At the same time, bond funds attracted $16.1 billion, marking the ninth consecutive week of inflows.

Within bond markets, the strongest demand appeared in:

• Short-term bond funds
• Euro-denominated bond funds
• Corporate bond funds

These investments typically appeal to investors seeking stability when stock markets become volatile.

Sector Rotation Begins

The market turbulence is also causing shifts between sectors.

Investors added money to sectors expected to benefit from higher commodity prices or geopolitical tensions:

• Industrial sector funds gained about $2.5 billion
• Energy sector funds received about $1.2 billion

Meanwhile, financial sector funds experienced outflows of nearly $1.9 billion, reflecting concerns about economic slowdown risks.

Gold Funds See Unexpected Outflows

Interestingly, gold and precious metals funds recorded withdrawals of about $2.6 billion, marking the second week of outflows.

Gold is often considered a safe haven during crises, but some investors appear to be selling the metal to raise cash or cover losses elsewhere.

Emerging Markets Also Slow

Investment into emerging market funds also cooled.

Equity fund inflows dropped to $5.3 billion, the lowest level in eight weeks. Bond fund purchases also slowed slightly.

Markets Enter a Risk-Off Phase

Overall, the latest fund flow data shows investors shifting into a more defensive posture.

Rising oil prices, geopolitical tensions, and fears of persistent inflation are prompting investors to reduce exposure to stocks and move capital toward bonds and safer assets.

If the Middle East conflict continues or energy prices keep rising, analysts say this cautious trend in global markets could intensify in the coming weeks.

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