Investors have withdrawn a significant amount of money from U.S. equity funds in the week ending August 13. Concerns about the possibility of interest rates remaining high for a longer period of time, as well as a surge in yields, have prompted caution among investors. There are worries of a potential selloff in mega-cap growth stocks, leading to a reduction in exposure to riskier assets. This comes ahead of Federal Reserve Chair Jerome Powell’s speech at Jackson Hole. According to Refinitiv Lipper data, U.S. equity funds saw the largest outflow since June 21, with $11.07 billion withdrawn during the week.
The increase in U.S. Treasury yields, which reached a 16-year high, has influenced investors’ behavior. Positive economic readings from the United States, such as job and consumption data, indicating stronger growth, have caused investors to scale back expectations for policy easing in the coming year. As a result, there has been a net withdrawal of $8.53 billion from large-cap stocks, the highest in a week since March 15. While investors have exited mid-cap stocks worth $226 million, they have accumulated small- and multi-cap funds worth $313 million and $244 million, respectively.
In terms of sectors, there have been significant outflows from financial and tech sector funds, with $743 million and $703 million being withdrawn, respectively. However, healthcare sector funds saw purchases of approximately $253 million on a net basis. U.S. bond funds also experienced a second consecutive weekly outflow, with approximately $977 million worth of net selling. U.S. high yield and short/intermediate investment-grade funds saw significant selling, with $1.36 billion and $1.06 billion being withdrawn, respectively. On the other hand, short/intermediate government & treasury funds witnessed inflows of around $1.68 billion. Additionally, U.S. money market funds had outflows of about $7.74 billion, marking the first outflow in five weeks.