US equity funds record biggest weekly outflow in seven weeks

Aug 11 – US equity funds saw heavy outflows in the seven days to Aug. 9 amid investor caution ahead of the US inflation data and concerns over credit rating downgrades in the banking sector.

According to Refinitiv Lipper data, investors withdrew about USD 14.96 billion from US equity funds during the week, their biggest week of net selling since June 21.

Wall Street stocks posted big losses last week, with the S&P 500 and the Nasdaq registering their biggest weekly declines since March as investors took profits after five months of gains.

Also tempering investor appetite, credit rating agency Moody’s downgraded 10 small- to mid-sized US lenders on Monday and placed another six banks on review for potential downgrades.

Investors sold out of US large-, mid-, and multi-cap funds to the tune of USD 14.95 billion, USD 543 million and USD 261 million, respectively, but small-cap funds still drew about USD 748 million in inflows.

By sector, materials, financials, and tech saw net sales of USD 891 million, USD 554 million, and USD 524 million, respectively. Meanwhile, healthcare funds received USD 1.39 billion, the most in a week since March 2022.

Meanwhile, US money market funds and government bond funds attracted USD 40.88 billion and USD 4.48 billion, respectively, as investors hunted for safety.

On a combined net basis, US bond funds received USD 3.99 billion in inflows, compared with about USD 938 million of outflow in the previous week.

US general domestic taxable fixed income and short/intermediate investment-grade funds received about USD 800 million each in inflows. On the other hand, high yield and loan participation funds saw net sales of USD 565 million and USD 419 million, respectively.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathyin Bengaluru; Editing by Mark Potter)