US equity funds post fourth weekly outflow on inflation worries, rate concerns

In the week ending September 18, US equity funds experienced their fourth consecutive outflow, totaling $31.44 billion. The withdrawal closely matched the $32 billion taken out the previous week, according to LSEG Lipper data. Crude oil prices surged to a four-month high, amplifying inflation concerns and driving up Treasury yields, which negatively impacted growth-oriented funds.

The Federal Reserve increased interest rates by 25 basis points on Wednesday and indicated that additional tightening might be necessary to rein in inflation caused by rising energy costs due to the Iran conflict. US large-cap, mid-cap, and multi-cap funds collectively saw $28.71 billion in withdrawals, with small-cap funds attracting a small net inflow of $568 million.

Equity sectoral funds recorded weekly inflows of $2.29 billion, primarily driven by financials, consumer discretionary, and technology sectors, which saw net purchases of $1.37 billion, $795 million, and $775 million, respectively. Global bond funds, however, experienced a five-month low in net purchases at $554 million. Meanwhile, short-to-intermediate government and Treasury funds attracted $3.49 billion in inflows for an eleventh consecutive week.

Money market funds, on the other hand, recorded a substantial $58.87 billion in net weekly outflows, the largest since July 15.