Inflows into U.S. equity funds fell sharply in the week through January 1 hit by rising Treasury yields and year-end profit-taking, along with concerns about a slower pace of Federal Reserve rate reductions this year.
Data from LSEG Lipper indicated that U.S. equity funds received just $490 million worth of investments during the week, significantly smaller than the $20.46 billion in net purchases in the week before.
Last week, concerns over the outlook for mega-cap technology stocks increased as the U.S. 10-year Treasury yield climbed to 4.641%, its highest since May 2.
Despite impressive annual gains in 2024, with the Nasdaq Composite, S&P 500, and Dow Jones Industrial Average rising 28.64%, 23.31%, and 12.88% respectively, all three indexes fell by over 1% this week as investors across sectors, took profits.
Investors bought $5.43 billion in U.S. large-cap funds and $844 million in multi-cap funds, but they pulled $1.67 billion from small-cap funds and $485 million from mid-cap funds.
Sectoral funds witnessed a fifth successive week of outflow, valued at a net 2.55 billion. Industrials, tech, and healthcare sectors led the outflows with $519 million, $385 million, and $358 million in net selling, respectively.
Concurrently, investors added a robust $54.59 billion worth of safer money market funds, the largest weekly net purchase in four weeks.
U.S. bond funds were under selling pressure for a third consecutive week, with investors divesting a net $493 million worth of these funds.
However, U.S. short-to-intermediate government & treasury funds segment bucked the trend as it gained a net $1.35 billion worth of inflows, the highest in three months.
