US Equity Funds Draw First Weekly Inflow in Four Weeks

After four consecutive weeks of net redemptions, US equity funds experienced their first weekly inflow in the week ending February 14, 2024, with investors adding a net $918 million to fund assets. This shift in investor sentiment can be attributed to several factors, including the performance of various sectors and the broader market.



During the week, taxable bond funds (+$9.0 billion, -0.30%), equity funds (+$8.0 billion, +0.50%), and alternatives funds (+$502 million, +0.20%) attracted net new capital. Meanwhile, money market funds (-$17.5 billion, +0.10%), commodities funds (-$645 million, -2.30%), tax-exempt bond funds (-$142 million, -0.10%), and mixed-assets funds (-$138 million, -0.20%) reported outflows over the week.

The performance of various sectors and the broader market played a significant role in influencing investor sentiment. U.S. broad-based equity indices reported mixed returns, with the DJIA (-0.65%) falling, while the Nasdaq (+0.65%), Russell 2000 (+3.17%), and S&P 500 (+0.11%) were all in the black. Both the Bloomberg Municipal Bond Total Return Index (-0.12%) and Bloomberg U.S. Aggregate Bond Total Return Index (-0.84%) fell over the week. Overseas indices also traded mixed, with the DAX (-0.20%), FTSE 100 (-1.44%), Nikkei 225 (+2.53%), S&P/TSX Composite (-1.02%), and Shanghai Composite (+1.27%) reporting varying performances.



The rise in interest rates and inflation has contributed to outflows from bond funds and money market funds, as investors seek higher-yielding investments or become more risk-averse. The increase in interest rates makes bond funds less attractive, while the rise in inflation can make money market funds less appealing. However, the recent performance of equity funds, particularly those focused on growth and value stocks, has drawn investors back into the market.

In conclusion, the first weekly inflow of US equity funds in four weeks can be attributed to the performance of various sectors and the broader market, as well as the influence of interest rates and inflation on investor sentiment. As the market continues to evolve, investors will need to stay informed about the latest trends and data to make informed decisions about their investments.