U.S. equity funds post biggest weekly outflow in 10 weeks

(Reuters) – U.S. equity funds had their biggest weekly outflow in 10 weeks in the seven days to June 7 as investors, worried about rising inflation and an economic slowdown, pulled out their money.

The upcoming release of U.S. inflation data next week added to investors’ caution as it could potentially influence the Federal Reserve’s decision on the pace of rate hikes necessary to tackle the price pressures.

Refinitiv Lipper data showed investors offloaded a net $16.44 billion worth of U.S. equity funds in their biggest weekly net selling since March 29.

A U.S. Labor Department jobs report last week showing a rise in employment in May, coupled with a rise in core inflation in April, has raised expectations of more interest rate hikes by the Federal Reserve.

Among U.S. funds, large- and mid-cap funds experienced net outflows of $7.53 billion and $1.07 billion, respectively. However, small-cap funds saw net inflows totalling approximately $1.15 billion.

Tech sector funds faced outflows of $1.31 billion after five consecutive weeks of inflows, while industrials and consumer discretionary funds pulled in $616 million and $399 million, respectively.

Money market funds received inflows of $19.83 billion, according to the data, reflecting investors’ continued preference for these funds as net buyers for the seventh consecutive week.

U.S. bond funds witnessed withdrawals of $561 million, following five consecutive weeks of inflows.

Investors sold U.S. general domestic taxable fixed-income and short/intermediate investment-grade funds amounting to $1.79 billion and $1.45 billion, respectively, while purchasing government funds totalling $1.76 billion.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru. Editing by Jane Merriman)