US equity funds post first inflow in five weeks on renewed AI optimism

On September 25, US equity funds saw their first inflows in five weeks, totaling $37.6 billion, according to LSEG Lipper data. This surge was fueled by growing demand for AI applications and data, as well as a decline in oil prices from their recent peaks. Large-cap technology funds, in particular, saw strong interest, driven by a general uptick in the tech sector and high consumer adoption of Meta's Muse agent, which secured the top spot in US app-download rankings.

However, the rising 30-year Treasury yields, reaching a 22-year high of 5.5016%, dampened investors' appetite for risk. This was highlighted by $36.62 billion in net inflows into US large-cap equity funds, marking the biggest weekly inflow since June 24. Multi-cap funds also received $395 million in inflows, while mid-cap and small-cap funds recorded outflows of $372 million and $1.02 billion, respectively.

Sectoral funds also experienced varying trends. Technology funds drew a record $4.89 billion in weekly inflows, another $515 million went to consumer discretionary funds, while financial sector funds saw withdrawals of $2.53 billion. In contrast, US bond fund inflows surged to $5.93 billion, up from roughly $562 million the previous week.

Investors pumped $4.15 billion into general domestic taxable fixed-income funds, the highest net buying since June 3, and recorded significant inflows in short-to-intermediate government and Treasury funds ($2.15 billion), short-to-intermediate investment-grade funds ($1.63 billion), and loan participation funds ($1.31 billion).

Meanwhile, money market funds attracted approximately $11 billion in net investments, marking an end to a two-week outflow streak.