US equity funds see weekly redemptions on trade tensions

(Reuters) -U.S. equity funds faced a second successive weekly outflow in the week through May 28 as tariff threats from President Donald Trump and concerns over rising borrowing costs prompted investors to cut exposure to U.S. assets.

Investors pulled a net $5.46 billion worth of capital from U.S. equity funds during the week, adding to the previous week's $11.02 billion net sales, data from LSEG Lipper showed.

U.S. small-cap equity funds came under pressure as investors pulled $2.39 billion—their largest weekly outflow since April 30. Large-cap and mid-cap funds also saw redemptions, with net outflows of $5.46 billion and $1.02 billion, respectively.

In contrast, sectoral funds attracted strong demand, recording $1.46 billion in net inflows and reversing the previous week's $985 million in outflows. The tech and industrial sectors led the gains with net purchases of $1.4 billion and $499 million, respectively.

Investors remained net buyers of U.S. bond funds for a sixth consecutive week, adding $6.98 billion in net inflows.

Short-to-intermediate investment-grade funds led the demand with $1.89 billion, marking their largest weekly inflow since March 5. U.S. government bond funds and general domestic taxable fixed income funds also attracted $1.55 billion and $479 million, respectively.

Investors, however, pulled a net $24.91 billion from money market funds, reversing the previous week's $21.37 billion in inflows.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; editing by David Evans)

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