US equity funds post fourth straight weekly outflows

The flow data points to a broad retreat from US stocks, especially larger companies. Large-cap funds saw $28.71 billion of redemptions, while mid-cap and multi-cap funds lost $1.73 billion and $3.16 billion, respectively. Small-cap funds bucked the trend with $568 million of inflows, suggesting some investors are rotating rather than abandoning equities altogether.

Sector flows show that money is still moving, just more selectively. Equity sector funds took in $2.29 billion, the most in seven weeks, led by financials, consumer discretionary and technology, which drew $1.37 billion, $795 million and $775 million, respectively. That helps explain why the broader market can stay mixed even as headline equity allocations weaken.

Bond flows reinforced the same message: investors are seeking protection from rates and inflation, not just dumping risk assets. Short- to intermediate-duration government and Treasury funds attracted $3.49 billion for an 11th straight week, while money market funds saw their biggest weekly withdrawal since July 15 at $58.87 billion, suggesting some cash is being put back to work, but cautiously.

The backdrop remains unfavorable for duration-heavy assets if inflation expectations keep climbing. The 10-year Treasury yield was around 5% in the latest trading data, while the SPY exchange-traded fund sat just above its 50-day moving average and the TLT long-bond ETF remained below both its 50-day and 200-day moving averages, reflecting persistent pressure on long-duration risk.

For investors, the key question is whether inflation data and energy prices force the Fed to stay tighter for longer. If they do, US equity fund outflows could extend beyond four weeks, with the biggest vulnerability still in large-cap growth and the market’s rate-sensitive sectors.