U.S. equity fund outflows jump on rate hike fears
2022.09.02 14:42
FILE PHOTO: The Wall St. sign is seen near the New York Stock Exchange (NYSE) in New York City, U.S., May 4, 2021. REUTERS/Brendan McDermid/File Photo
(Reuters) – U.S. equity funds witnessed a surge in capital outflows in the week to Aug 31 on concerns that the Federal Reserve’s tough stance to break persistently high inflation would drag the economy into recession.
According to Refinitiv Lipper data, investors offloaded $10.19 billion worth of U.S. equity funds, posting their biggest weekly net selling since June 15.
Fund flows: US equities bonds and money market funds – https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwdklrpo/Fund%20flows%20US%20equities%20bonds%20and%20money%20market%20funds.jpg
Federal Reserve Board chair Jerome Powell said last week that the central bank will raise rates as high as needed, and that people should not expect the Fed to dial back its monetary policy quickly until the inflation problem is fixed.
U.S. large-, mid-, and small-cap funds all saw weekly outflows of $8.55 billion, $1.02 billion and $700 million, respectively.
Growth funds were hit hard as weekly net selling jumped to $4.52 billion, marking the biggest withdrawal in 11 weeks, but value funds secured $724 million in net buying.
Fund flows: US growth and value funds – https://fingfx.thomsonreuters.com/gfx/mkt/klpykagdkpg/Fund%20flows%20US%20growth%20and%20value%20funds.jpg
Among sector funds, healthcare and tech funds posted outflows of $522 million and $414 million respectively, although financials obtained a third weekly inflow at $989 million.
Fund flows: US equity sector funds – https://fingfx.thomsonreuters.com/gfx/mkt/egpbkryanvq/Fund%20flows%20US%20equity%20sector%20funds.jpg
Investors also exited bonds funds of $6.46 billion, marking a second weekly outflow.
U.S. high yield and municipal debt funds recorded outflows of $4.57 billion and $2.4 billion respectively, but short/intermediate government & treasury funds received $2.08 million, the biggest weekly inflow since June 15.
Fund flows: US bond funds – https://fingfx.thomsonreuters.com/gfx/mkt/dwvkrxdedpm/Fund%20flows%20US%20bond%20funds.jpg
Meanwhile, investors exited money market funds of $563 million after pouring a net $11.07 billion in the previous week.
