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Us Equity Fund Outflows Ease on Renewed Hopes for Fed Rate Cuts

U.S. Equity Fund Outflows Ease on Renewed Hopes for Fed Rate Cuts

Outflows from U.S. equity funds cooled to the lowest in three weeks, in the week to January 22, buoyed by shifting expectations for a pause in rate cuts after a benign U.S. core inflation report bolstered equities.

Weekly net selling in U.S. equity funds fell off to $3.2 billion during the week from about $8.26 billion worth of net outflows in the prior week, data from LSEG Lipper showed.

Outflows from large- and mid-cap funds cooled to $2.68 billion and $972 million from $4.35 billion and $1.57 billion, respectively, in the previous week.

Meanwhile, multi-cap and small-cap funds had a net $1.53 billion and $290 million worth of sales, respectively.

However, U.S. sectoral funds obtained a significant $2.74 million, the largest amount for a week since November 27, 2024. Investors snapped up financials, industrials, and tech sector funds worth $998 million, $816 million, and $657 million, respectively during the week.

Bond funds were popular for a third successive week with U.S. investors pumping a net $8.83 billion into these funds following $6.19 billion worth of net purchases a week ago.

General domestic taxable fixed-income funds and municipal debt funds received a sharp $2.33 billion and $2.03 billion, respectively, in inflows. Investors also acquired loan participation funds totaling a net $1.62 billion in a fourth consecutive week of purchases.

At the same time, money market funds saw a net $32.86 billion worth of investments, the fourth weekly inflow in five weeks.