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US equity funds see outflows as investors eye economic data

December 8, 2023 6:36 AM EST

FILE PHOTO: Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking/File Photo

(Reuters) - U.S. equity funds witnessed outflows for a second straight week in the seven days to Dec. 6 on some investor caution ahead of economic data which could provide more insights about the Federal Reserve's interest rate trajectory.

Investors exited a net $577 million worth of U.S. equity funds during the period, although this was substantially less than the $3.26 billion worth of net selling in the previous seven days.

The non-farm payrolls report for November is set to test whether recent market optimism on lower rates is premature.

Some analysts forecast a so-called Santa Claus rally, anticipating an equity rebound from a projected mid-December low, often driven by tax loss harvesting where investors sell underperforming stocks for tax benefits.

Large-cap equity funds reported their first weekly outflow in seven weeks, totalling $450 million. Mid-cap funds had outflows of $1.03 billion, while small and multi-cap funds saw net buying of $1.2 billion and $651 million respectively.

U.S. equity sector funds still received about $2.89 billion worth of inflows with financials, real-estate, and communication services securing $1.32 billion, $884 million and $550 million, respectively.

Investors, meanwhile, continued accumulating money market funds for a seventh straight week as they poured roughly $54.58 billion into these funds.

Elsewhere, investors pulled out $2.56 billion from U.S. bond funds, extending net selling into a third successive week.

They sold U.S. short/intermediate government & treasury, and general domestic taxable fixed income funds of $3.94 billion and $1.51 billion respectively, while securing high yield, and short/intermediate investment-grade funds of $1.93 billion and $572 million, respectively.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Alexander Smith)



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