Investors boosted their stakes in U.S. equity funds during the week ending February 26, as they remained optimistic about the economy and anticipated a Federal Reserve rate cut later in the year to spur growth.
They acquired a net $19.71 billion in U.S. equity funds, marking the largest weekly net purchase since December 25, 2024, based on data from LSEG Lipper. Mark Haefele, chief investment officer at UBS Global Wealth Management, stated, "The U.S. economy is still in good shape, and we do not think the announced tariffs will necessarily lead to a major negative impact on growth."
Although U.S. large-cap funds garnered the most significant interest with $20 billion in net purchases, small-cap and mid-cap funds experienced outflows of $545 million and $197 million, respectively. Tech, healthcare, and communication services sectoral funds attracted $1.05 billion, $869 million, and $518 million, while financial sector funds saw divestments of $1.2 billion.
The S&P 500 and Nasdaq Composite indexes declined by 2.5% and 5%, respectively, this week. Nvidia shares' underperformance following the company's quarterly report was a significant factor in driving this drop.
Investors allocated $49.47 billion to money market funds, recording the largest weekly net purchase since January 8. U.S. bond funds continued to be popular for the eighth consecutive week, drawing a net $7.42 billion in inflows. Notably, U.S. short-to-intermediate investment-grade funds, short-to-intermediate government and treasury funds, and general domestic taxable fixed income funds led the way with inflows of $1.82 billion, $1.56 billion, and $1.37 billion, respectively.