US equity funds witness outflows for fifth week in a row

US investors were net sellers of equity funds for a fifth successive week in the seven days to May 1, exercising caution ahead of the Federal Reserve’s policy decision and scaling back expectations for interest rate cuts that were prevalent at the start of the year.

According to LSEG data, investors shed a net USD 5.48 billion worth of US equity funds, extending the weekly selling trend into a fifth consecutive week.

Fed Chair Jerome Powell kept rates steady on Wednesday, signaling future rate cuts but cautioning they might be delayed due to persistent inflation in the first quarter.

However, US large-cap equity funds were in demand, recording approximately USD 1.2 billion in net purchases during the week — marking the second consecutive weekly inflow, buoyed by strong earnings from Alphabet, and Microsoft.

Meanwhile, US small-cap, mid-cap, and multi-cap funds experienced net outflows of USD 2.14 billion, USD 1.08 billion, and USD 637 million, respectively.

By sector, investors withdrew USD 790 million, USD 684 million, and USD 295 million from the healthcare, consumer discretionary, and industrial sectors, respectively.

US bond funds attracted approximately USD 674 million in net purchases, marking the second consecutive week of inflows.

US mortgage funds received a substantial USD 1.35 billion, marking the largest weekly inflow since January 2023. Loan participation and municipal debt funds also recorded net purchases of USD 665 million and USD 515 million, respectively, during the week.

Meanwhile, investors withdrew approximately USD 2.66 billion from US short/intermediate government and treasury funds, ending a four-week buying streak.

Money market funds secured USD 26.53 billion in a second successive week of net buying.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; editing by Jonathan Oatis)