U.S. equity funds experienced their fourth weekly outflow in five weeks by $10.71 billion for the week ending February 5, driven by escalating geopolitical risks related to President Donald Trump's recent trade actions with China and investor concerns about disappointing earnings from leading technology firms.
According to data from LSEG Lipper, this marked the largest weekly divestment in U.S. equity funds since December 18, 2024. Market worries increased due to Alphabet's underperforming cloud revenue growth, substantial investments in artificial intelligence, and Advanced Micro Devices' weaker data center sales projections.
The retreat from equity funds was prominent in large-cap equities with a massive $6.44 billion withdrawn, the highest weekly outflow since December 18. Small-cap, multi-cap, and mid-cap funds also saw substantial withdrawals of $2.02 billion, $1.12 billion, and $335 million, respectively.
Conversely, sectoral funds gained $1.2 billion in the third consecutive weekly inflow, with financials and consumer discretionary sectors leading with $1.01 billion and $907 million, respectively.
Investors sought safety by putting $39.61 billion into money market funds after net sales of $35.13 billion in the prior week. Bond funds remained popular, attracting $9.22 billion of inflows for the fifth consecutive week.
Among bond funds, U.S. general domestic taxable fixed income, short-intermediate investment-grade, and loan participation funds were favored, receiving significant inflows of $4.64 billion, $3.31 billion, and $2.93 billion, respectively.