U.S. equity funds experienced a significant increase in outflows for the week ended January 15, as the possibility of Federal Reserve rate cuts this year diminished and investors remained cautious about ongoing quarterly earnings. According to LSEG Lipper data, investors withdrew a substantial $8.23 billion from U.S. equity funds during the week, adding to the net $5.01 billion in sales from the previous week.
Despite U.S. stock market gains fueled by lower-than-expected core inflation and strong financial reports from companies such as JP Morgan and Goldman Sachs, concerns persisted over potential tariffs imposed by President-elect Donald Trump on Mexico, Canada, and increased tariffs on China that could elevate inflation and hinder long-term growth.
Investors divested from large-cap, mid-cap, multi-cap, and small-cap funds, totaling $4.35 billion, $1.54 billion, $1.02 billion, and $379 million, respectively. While sectoral funds experienced $428 million in outflows following net purchases of $35 million the previous week, the financial sector remained attractive with approximately $752 million in net investments.
Meanwhile, U.S. bond funds attracted inflows for the second time in five weeks, totaling $6.18 billion on a net basis. Noteworthy inflows were observed in U.S. general domestic taxable fixed income funds, short-to-intermediate government and treasury funds, and loan participation funds, amounting to $2.33 billion, $2.15 billion, and $1.42 billion, respectively.
In contrast, investors reduced their holdings in money market funds by a net $60.07 billion, marking the end of a three-week trend of net purchases.