U.S. equity funds see massive outflows on tech selloff

January 28, 2022

(Reuters) – U.S. investors ramped up their selling of equity funds in the week to Jan. 26, hit by a selloff in tech stocks, and the rising geopolitical tensions between Russia and Ukraine.

According to Refinitiv data, investors offloaded U.S. equity funds worth $9.42 billion in the week – more than twice the amount it offloaded the previous week. (Graphic: Fund flows: US equities bonds and money market funds, https://fingfx.thomsonreuters.com/gfx/mkt/egvbklymapq/Fund%20flows%20US%20equities%20bonds%20and%20money%20market%20funds.jpg)

The S&P 500 slumped during the week, as a selloff in technology stocks ahead of the Federal Reserve’s policy meeting overshadowed upbeat results from blue-chip companies including IBM and 3M.

In its latest policy update on Wednesday, the Fed indicated it was likely to raise rates in March, as widely expected, and reaffirmed plans to end its pandemic-era bond purchases that month before launching a significant reduction in its asset holdings.

U.S. growth funds witnessed outflows of $11.75 billion, the most in seven weeks, while investors poured $465 million into value funds. (Graphic: Fund flows: US growth and value funds, https://fingfx.thomsonreuters.com/gfx/mkt/xmvjojklepr/Fund%20flows%20US%20growth%20and%20value%20funds.jpg)

Among sector funds, industrials, real estate, and technology funds posted outflows of over $500 million each. On the other hand, financials and utilities sector funds received inflows of $450 million and $407 million respectively. (Graphic: Fund flows: US equity sector funds, https://fingfx.thomsonreuters.com/gfx/mkt/dwpkrjdakvm/Fund%20flows%20US%20equity%20sector%20funds.jpg)

Meanwhile, U.S. bond funds saw net selling of $7.04 billion, the biggest in six weeks.

Investors sold U.S. municipal bond funds worth $1.61 billion, which was the biggest outflow since April 2020, while U.S. taxable bond funds posted outflows of $5.38 billion. However, U.S. general domestic taxable fixed income funds and loan participation funds obtained $2.89 billion and $2 billion. (Graphic: Fund flows: US bond funds, https://fingfx.thomsonreuters.com/gfx/mkt/myvmnjogqpr/Fund%20flows%20US%20bond%20funds.jpg)

U.S. money market funds received $25.46 billion in net buying, after three consecutive weeks of outflows.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Hugh Lawson)

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