US bond funds gain biggest weekly inflow in 11-months

Aug 5 (Reuters) – US bond funds recorded their biggest weekly purchase in eleven months in the week to Aug. 3 on expectations that slowing growth would prompt the Federal Reserve to slow down the pace of its rate hikes to aid the economy.

According to Refinitiv Lipper data, US bond funds obtained a net USD 9.37 billion in purchases, the biggest weekly inflow since Sept. 1.

The US gross domestic product fell at a 0.9% annualized rate in the second quarter, while the growth in US factory activity weakened to a two-year low in July, data released during the reported week showed, casting worries about the economy.

Due to those concerns, the 10-year benchmark yield hit a four-month low of 2.516% earlier this week.

US government and municipal bond funds obtained USD 2.83 billion in inflows after a weekly outflow, while high yield and general domestic taxable fixed income funds received a net USD 3.7 billion and USD 2.61 billion, respectively.

US equity funds recorded outflows of USD 6.84 billion, which compares with purchases of USD 688 million in the previous week.

Investors sold US large- and mid-cap funds of USD 8.95 billion and USD 152 million, respectively, but small-cap funds gained USD 1.17 billion in inflows.

Both equity growth and value funds witnessed disposals of about USD 1.7 billion each.

US sector specific funds, however, witnessed some purchases with consumer discretionary and financials attracting USD 790 million and USD 541 million, respectively.

Meanwhile, investors withdrew USD 9.4 billion out of money market funds after four straight weeks of net purchases.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Shailesh Kuber)