US equity funds see biggest weekly outflow in three months

(Reuters) – U.S. equity funds witnessed robust outflows in the seven days to Sept. 27 on worries about a potential extension of the Federal Reserve’s restrictive monetary policy and a renewed surge in Treasury yields.

According to LSEG data, U.S. equity funds suffered outflows of a net $11.69 billion, the biggest of any week since June 21.

Investors were concerned about U.S. borrowing costs as remarks from several Fed officials reaffirmed a longer period of tighter policy to tame inflation.

The central bank held interest rates unchanged last week but flagged the potential for an additional rate hike and fewer cuts next year.

A surge in Treasury yields also hit stocks. U.S. benchmark 10-year yields rose to 4.688% this week, the highest level since October 2007.

Equity value funds observed $4.37 billion worth of outflows, the most since December 2022. Meanwhile, growth funds witnessed about $1.95 billion worth of net outgo.

Among sectoral funds, the financials, healthcare, and consumer discretionary sectors logged net withdrawals of $767 million, $683 million and $605 million respectively.

Meanwhile, investors pulled out a net $3.49 billion from U.S. bond funds in their most significant weekly net selling since Dec. 28 last year.

U.S taxable bond funds witnessed $2.27 billion worth of net selling, while net withdrawal from municipal bond funds stood at $1.42 billion.

Investors offloaded high-yield bond funds of a net $2.6 billion in their biggest weekly net disposal since Feb. 22.

Meanwhile, U.S. money market funds attracted a marginal $725 million in inflows during the week after facing $9.61 billion worth of outflows in the previous week.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Jan Harvey)