U.S. equity funds draw inflows for second week amid inflation relief

(Reuters) – U.S. equity funds witnessed net purchases for a second straight week during the seven days to July 5, as signs of cooling inflation soothed investor worries about more interest rate hikes from the Federal Reserve.

Investors purchased a net $4.44 billion worth of U.S. equity funds during the week, up from about $2.04 billion in the previous week, data from Refinitiv Lipper showed.

In terms of fund types, U.S. large-cap funds experienced inflows of $6.98 billion, adding to the $6.06 billion of net purchases in the previous week. By contrast multi-cap and mid-cap funds witnessed outflows of $1.9 billion and $694 million respectively.

Among sectors, industrials, consumer staples, and tech sectors attracted $697 million, $187 million, and $169 million respectively, while financials saw outflows of $300 million.

However, concerns about potential rate hikes resurfaced after a stronger than expected private payrolls report was released on Thursday and hawkish comments were made by Federal Reserve Bank of Dallas President Lorie Logan.

In fixed income, U.S. bond funds recorded significant inflows of $5.17 billion, marking the largest amount in 13 weeks. Investors showed strong interest in U.S. taxable bond funds, pouring $5.39 billion into these funds. However, municipal bond funds experienced outflows of $60 million.

In terms of specific bond fund categories, U.S. general domestic taxable fixed income funds and short/intermediate investment-grade funds witnessed net purchases of $1.93 billion and $2.82 billion respectively.

U.S. money-market funds attracted $30.38 billion in net buying after three weekly outflows in a row.

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