U.S. equity funds experienced their largest net outflows in three months during the week ending March 19, amid concerns about the potential effects of U.S. tariff policies and cautious sentiment leading up to a monetary policy decision from the Federal Reserve.
LSEG Lipper data revealed that investors withdrew $33.53 billion from U.S. equity funds during this week, marking the largest weekly net withdrawal since December 18, in stark contrast to the $4.84 billion in net purchases the previous week.
The Federal Reserve maintained its benchmark overnight interest rate and indicated that two quarter-point cuts are likely later this year, alongside forecasts for slower economic growth and rising inflation.
U.S. large-cap funds faced $27.38 billion in net selling, ending a three-week buying streak. Outflows were also recorded in small-cap, multi-cap, and mid-cap funds, with reductions of $3.48 billion, $1.42 billion, and $1.09 billion, respectively.
In sectoral funds, selling pressure eased to its lowest level in three weeks, with a net withdrawal of $1.35 billion, down from combined net sales of $7.54 billion in the prior two weeks. Tech, communication services, and healthcare funds led these outflows, reporting net sales of $451 million, $230 million, and $227 million, respectively.
In contrast, U.S. bond funds experienced their first weekly outflow in 11 weeks, totaling $513 million. This included divestments from general domestic taxable fixed income funds and loan participation funds, which saw reductions of $1.56 billion and $1.62 billion, respectively. However, short-to-intermediate government and treasury funds attracted a net inflow of $2.89 billion, marking the 13th consecutive week of inflows.
Additionally, U.S. investors withdrew $28.83 billion from money market funds, following $13.43 billion in net sales a week prior.