U.S. Equity Fund Outflows Fall as Inflation Concerns Ease
Net outflows from U.S. equity funds have declined to their lowest level in three weeks, as investors shift expectations for a pause in rate cuts following a favorable U.S. core inflation report that boosted equity markets.
Outflows dropped to $3.2 billion during the week ending January 22, down from $8.26 billion the previous week, according to data from LSEG Lipper.
Outflows from large- and mid-cap funds eased to $2.68 billion and $972 million, respectively, from $4.35 billion and $1.57 billion the prior week. Meanwhile, multi-cap and small-cap funds experienced net sales of $1.53 billion and $290 million, respectively.
However, U.S. sectoral funds saw significant inflows of $2.74 million, the largest weekly total since November 27, 2024. Investors favored financials, industrials, and tech sector funds with inflows of $998 million, $816 million, and $657 million, respectively.
Bond funds remained popular for a third consecutive week, with U.S. investors pouring a net $8.83 billion into these funds after $6.19 billion in net purchases the previous week. General domestic taxable fixed income funds and municipal debt funds received robust inflows of $2.33 billion and $2.03 billion, respectively.
Loan participation funds also attracted net inflows of $1.62 billion, marking a fourth consecutive week of purchases.
Meanwhile, money market funds witnessed net inflows of $32.86 billion, extending a four-week inflow streak out of the last five.