Investors continued to pull out of U.S. equity funds for a fifth straight week, with data through Sunday showing net outflows totaling $5.48 billion. The outflows continued as investors remained cautious ahead of the Federal Reserve’s policy meeting.
The Federal Reserve, led by Jerome Powell, held interest rates steady on Wednesday. Powell indicated the possibility of future rate cuts but also expressed concern about inflation that has been running high since the first quarter, suggesting any cuts may not be imminent.
Despite the broader trend, U.S. large-cap stock funds saw net inflows for the second straight week, with purchases totaling about $1.2 billion. The positive move was supported by strong earnings reports from tech giants Alphabet (NASDAQ: GOOGL) and Microsoft (NASDAQ: NASDAQ:MSFT).
On the other hand, US small-cap, mid-cap and multi-cap funds saw net outflows of $2.14 billion, $1.08 billion and $637 million, respectively. Investors also pulled money from specific sectors: healthcare pulled $790 million, consumer discretionary $684 million and industrials $295 million.
In contrast to stocks, U.S. bond funds attracted about $674 million, marking their second week of net inflows. Notably, U.S. mortgage funds received $1.35 billion, the largest weekly inflow since January 2023. In addition, lending participation and municipal debt funds recorded inflows of $665 million and $515 million, respectively.
Outflows from short-term/intermediate-term funds of the U.S. government and Treasury totaled about $2.66 billion, ending a four-week streak of net purchases. However, money market funds secured a significant $26.53 billion, marking another week of net inflows and suggesting a possible shift in investor preference toward more liquid, lower-risk assets.
Source: Investing
