US equity funds see biggest weekly outflow in four weeks

Sept 22 – US equity funds suffered substantial outflows in the seven days to Sept. 20, hit by worries that the Federal Reserve would potentially extend the duration of its restrictive monetary policy.

According to LSEG data, investors pulled out a net USD 6.64 billion from US equity funds in their biggest weekly net selling since Aug. 23.

The US Federal Reserve held interest rates unchanged on Wednesday but flagged the potential for an additional rate hike this year and fewer reductions next year.

Equity growth funds witnessed USD 2.41 billion of outflows, in stark contrast to USD 3.88 billion in net purchases a week ago. Investors also liquidated USD 1.26 billion worth of equity value funds.

Among sectors, financials, healthcare, and tech suffered net disposals to the tune of USD 1.51 billion, USD 388 million, and USD 357 million, respectively.

Meanwhile, US bond funds received USD 1.3 billion, the highest weekly net inflow since July 26.

US general domestic taxable fixed income funds obtained USD 1.29 billion, the biggest amount in five weeks. Investors also poured USD 645 million and USD 405 million respectively into short/intermediate investment-grade, and short/intermediate government & treasury funds.

High yield bond funds, however, suffered the most significant weekly outflow in four weeks, amounting to USD 583 million.

Meanwhile, investors exited about USD 9.68 billion of US money market funds after three weekly net purchases in a row.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Emelia Sithole-Matarise)