Investors Pull $21.93 Billion from U.S. Equity Funds as Fed Decision Looms

U.S. equity funds saw the largest weekly outflow in 18 months, as investors withdrew a net $21.93 billion in the week ending June 12. This marked the most significant weekly net disposal since mid-December 2022, according to data from LSEG. Despite this, the S&P 500 (SPY) and Nasdaq Composite (QQQ) both reached record closing highs, buoyed by data suggesting cooling inflation. Large-cap equity funds experienced the most considerable outflow, losing $14.94 billion, the largest weekly outflow since December 21, 2022. Investors also pulled funds from multi-cap, mid-cap, and small-cap equity funds, while seeking safety in U.S. bond and money market funds, which saw inflows of $1.72 billion and $20 billion, respectively. Sectoral equity funds, particularly in technology, enjoyed a second consecutive week of inflows. Market Overview:

• Investors withdrew $21.93 billion from U.S. equity funds in the largest weekly outflow since December 2022.
• Large-cap equity funds saw $14.94 billion in outflows, the most since December 2022.
• Sectoral equity funds, especially technology, saw inflows for the second consecutive week.

Key Points:

• The S&P 500 and Nasdaq Composite reached record closing highs amid signs of cooling inflation.
• U.S. bond funds attracted $1.72 billion, marking their second consecutive week of inflows.
• Multi-cap, mid-cap, and small-cap equity funds also experienced significant outflows.

Looking Ahead:

• Continued monitoring of equity fund flows will be crucial to gauge investor sentiment.
• The Federal Reserve's policy decisions will likely impact future fund flows and market performance.
• Technology sector inflows suggest sustained investor interest in this area despite broader outflows.

U.S. equity funds' significant outflows highlight investor caution amid economic uncertainty. While the S&P 500 and Nasdaq Composite hit record highs, large-cap and other equity funds faced substantial withdrawals. Conversely, bond and money market funds saw increased inflows, indicating a preference for safer investments. The market's response underscores the delicate balance investors are maintaining in light of the Federal Reserve's policy stance. The technology sector's continued inflows reflect confidence in its resilience and growth potential. Future fund flows and market trends will depend heavily on economic data and Fed decisions.