U.S. Equity Fund Outflows Decrease

(Reuters) – Outflows from U.S. equity funds cooled to the lowest level in three weeks ending January 22, due to shifting expectations for a pause in rate cuts following a benign U.S. core inflation report that bolstered equities.

Weekly net selling in U.S. equity funds decreased to $3.2 billion, down from about $8.26 billion in net outflows the prior week, as reported by data from LSEG Lipper.

Outflows from large- and mid-cap funds declined to $2.68 billion and $972 million from $4.35 billion and $1.57 billion, respectively, in the previous week.

Meanwhile, multi-cap and small-cap funds reported a net sale of $1.53 billion and $290 million, respectively.

U.S. sectoral funds saw significant interest, with an inflow of $2.74 billion, the largest for a week since November 27, 2024. Investors actively purchased funds in the financials, industrials, and tech sectors, totalling $998 million, $816 million, and $657 million, respectively, during the week.

Bond funds continued to attract investors for the third week in a row, with U.S. investors infusing a net $8.83 billion into these funds following a previous $6.19 billion in net purchases.

General domestic taxable fixed income and municipal debt funds received inflows of $2.33 billion and $2.03 billion, respectively. Additionally, loan participation funds gained $1.62 billion in another week of strong purchases.

In contrast, money market funds witnessed a net investment of $32.86 billion, marking the fourth inflow in five weeks.