U.S. investors withdrew from equity funds for the second consecutive week through February 12 due to a combination of high volatility, a weaker market, and concerns surrounding President Donald Trump's policies, leading to reduced risk appetite.
According to LSEG Lipper data, U.S. equity funds experienced net sales of $2.25 billion during the week, marking the fifth out of the last six weeks where investors have divested from these funds.
In January, the U.S. stock market witnessed its most significant increase in almost 1.5 years, reinforcing the Federal Reserve's decision to refrain from hastily reducing interest rates in the face of growing economic uncertainties.
During the week, U.S. mid-cap funds suffered a net outflow of $1.14 billion, the largest weekly sales in four weeks. Additionally, investors pulled out $451 million from small-cap funds, $10.65 million from multi-cap funds, but invested $864 million in large-cap funds on a net basis.
Conversely, U.S. sectoral equity funds experienced net sales of $1.55 billion, marking the first weekly outflow in four weeks. Notably, investors divested $965 million from consumer discretionary funds and $686 million from healthcare funds.
At the same time, U.S. bond funds attracted inflows for the sixth consecutive week, totaling $7.45 billion on a net basis. Notably, short-to-intermediate investment grade funds recorded a substantial amount of $3.54 billion following net purchases of around $3.3 billion in the previous week.
General domestic taxable fixed income funds and short-to-intermediate government and treasury funds also gained popularity, accumulating net inflows of $1.84 billion and $1.5 billion, respectively.
Conversely, money market funds experienced a marginal outflow of $134 million after a strong influx of $39.06 billion the previous week.