US equity funds see outflows on caution over Fed policy uncertainty
6:55 am Friday, January 10th, 2025
(Reuters) – U.S. investors pulled out of equity funds and moved to the safety of money market funds in the week to Jan. 8 driven by uncertainties about the Fed’s interest rate trajectory and looming tariff policies by the incoming Trump administration.
Investors divested a net $5.05 billion worth of U.S. equity funds during the week and acquired a robust $56.19 billion worth of money market funds in their largest weekly net purchase since Dec. 4, 2024, according to LSEG Lipper data.
The U.S. Federal Reserve’s Dec. 17-18 meeting minutes, released Wednesday, revealed officials’ growing concerns about persistent price pressures and the potential impact of policies by the incoming Trump administration.
Investors withdrew a net $4.88 billion from U.S. large-cap funds, compared with $5.43 billion worth of net purchases the previous week. Mid-cap and multi-cap funds also had outflows totaling $1.2 billion and $751 million, respectively, but small-cap funds gained $272 million worth of inflows.
Sectoral funds were mixed, with industrials facing a notable $467 million worth of outflows, while communication services and tech had net $348 million and $338 million, respectively, in inflows.
Bond funds, meanwhile, eked out a net $9.14 billion worth of weekly inflow following three consecutive weeks of net sales.
General domestic taxable fixed income funds were popular as investors poured $3.52 billion, the highest in nearly a year, into these funds.
Short-to-intermediate investment-grade funds, loan participation funds, and short-to-intermediate government and treasury funds, also saw a significant $2.62 billion, $2.17 billion and $2.02 billion worth of net additions, respectively.
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Shounak Dasgupta)
