US equity funds suffer outflows on rising bond yields, geopolitical tensions

(Reuters) – U.S. equity funds registered huge withdrawals in the week ending Oct. 18, hit by a surge in bond yields and escalating geopolitical tensions in the Middle East.

Investors sold $4.57 billion of U.S. equity funds on a net basis during the week, logging outflows for the fifth consecutive week, according to LSEG data.

U.S. Treasury bond yields surged after consensus-topping retail sales data on Tuesday added to evidence that the economy is chugging along despite the Federal Reserve’s efforts to curb inflation through interest rate hikes.

Among equities, growth funds witnessed $1.52 billion of selling on net basis after obtaining roughly $1.93 billion in inflows in the past week. Value funds also experienced withdrawals, amounting to $1.12 billion on a net basis.

Utilities and tech topped sectoral outflows, booking $931 million and $707 million of outflows each. Industrials, however, drew $385 million, the biggest weekly inflow since Aug. 9.

Investors also liquidated about $3.66 billion of bond funds, compared with about $1.13 billion of net purchases in the previous week.

U.S. short/intermediate investment-grade, and high yield funds saw $2.4 billion and $1.93 billion worth of net selling, respectively. Although, short/intermediate government & treasury, and mortgage funds still secured $742 million and $489 million, respectively in inflows.

Investors also pulled out of money market funds for a second successive week, with about $97.26 billion of net selling in the week to Oct. 18.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Dhanya Ann Thoppil)