U.S. equity funds attracted significant inflows in the week to December 25, recovering from a prior-week sell-off, buoyed by a cooler inflation report, a stopgap funding bill averting a government shutdown, and a so-called “Santa Claus” rally.
According to LSEG Lipper data, U.S. equity funds gained inflows for the seventh week in eight weeks, to the tune of $20.56 billion on a net basis following a sharp $49.7 billion worth of net sales in the previous week.
Last Friday’s Commerce Department report revealed the PCE price index rose only 0.1% in November, below analyst expectations, reviving hopes for further Federal Reserve rate cuts next year and bolstering U.S. stocks, which also typically benefit from the “Santa Claus Rally” in the final week of the year.
However, investors focused investments into U.S. large-cap funds, as they pumped a net $31.67 billion into these funds, the highest since October 2, following $20.94 billion worth of net sales in the prior week.
Meanwhile, Small-cap, mid-cap, and multi-cap funds experienced outflows of $2.95 billion, $1.17 billion, and $853 million, respectively.
Sectoral equity funds also witnessed a net $2.14 billion worth of outflows with healthcare and consumer discretionary, having $495 million and $476 million in net sales, leading the way.
U.S. bond funds experienced their second consecutive week of outflows, with investors withdrawing a net $5.42 billion.
Among the segments, U.S. emerging markets debt, short-to-intermediate investment-grade, and municipal debt funds recorded net sales of $924 million, $899 million, and $879 million, respectively.
In contrast, short-to-intermediate government & treasury funds bucked the trend, attracting $957 million in inflows.
Meanwhile, U.S. money market funds saw substantial interest, drawing a net $41.72 billion, a sharp reversal from the previous week’s $27.31 billion in net sales.
