Cautious optimism drives inflows to U.S. equity funds amid positive growth outlook

7:35 am Friday, June 30th, 2023

(Reuters) – U.S. equity funds attracted inflows during the week ending June 28, buoyed by positive growth expectations as robust economic indicators eased concerns about higher borrowing costs.

Investors purchased U.S. equity funds of a net $2.1 billion after disposing of about $16.5 billion worth of funds in the previous week, data from Refinitiv Lipper showed.

Investor sentiment improved as reports revealed an increase in new orders for key U.S.-manufactured capital goods, a rise in sales of new single-family homes in May, and a surge in U.S. consumer confidence to a near 1-1/2 year high in June.

Consequently, U.S. growth funds witnessed inflows of $1.1 billion, rebounding from the $3.1 billion outflows reported the previous week. Additionally, value funds attracted $428 million in investments.

Breaking down the data by size, U.S. large-cap, multi-cap, and small-cap equity funds experienced net inflows of $6.1 billion, $1 billion, and $121 million, respectively. However, mid-cap funds faced outflows of $536 million.

On the sector front, U.S. sectoral funds encountered net outflows of $1.47 billion, with materials and consumer staples witnessing $518 million and $326 million in net selling, respectively.

In contrast, U.S. bond funds registered their first weekly outflow in three weeks, with net selling amounting to $2.37 billion. Specifically, U.S. taxable bond funds saw outflows of $2.19 billion, while municipal bond funds recorded net selling of $289 million.

U.S. short/intermediate government & treasury and inflation-protected funds experienced net outflows of $1.53 billion and $262 million, respectively. However, short/intermediate investment-grade funds attracted inflows worth $472 million.

Meanwhile, U.S. money market funds sustained outflows for a third consecutive week, with withdrawals totaling $6.48 billion.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathyin Bengaluru; Editing by Chizu Nomiyama)