Introduction
U.S. money market funds experienced significant inflows in early June as investors sought safer investment options amidst rising tariffs on imports and uncertainties surrounding political developments.Context
In the week ending June 4, investor sentiment shifted towards caution, leading to substantial net purchases of money market funds.Developments
According to LSEG Lipper data, U.S. investors acquired a net $66.24 billion in money market funds, marking the largest weekly net purchase since December 4, 2024. In contrast, riskier equity funds encountered a net outflow of $7.42 billion, significantly rising from approximately $5.39 billion in disposals the previous week.The small-cap segment reported a net drawdown of $2.99 billion, the largest since April 30. Outflows from multi-cap, mid-cap, and large-cap funds were $2.13 billion, $1.05 billion, and $962 million, respectively. Sectoral funds showed minor net inflows of $136 million, with notable gains in technology ($1.15 billion) and consumer staples ($309 million), while financials saw withdrawals of nearly $1.16 billion.
In the bond fund segment, weekly net inflows cooled to a four-week low of $4.8 billion. Despite overall weaker demand, short-to-intermediate investment-grade funds gained popularity, attracting a net $3.98 billion in inflows, the highest since November 2024. Additionally, inflation-protected funds and general domestic taxable fixed income funds received significant inflows of $634 million and $505 million, respectively.