U.S. equity funds experienced a sharp outflow of $8.23 billion for the week ending January 15, according to LSEG Lipper data, following a $5.01 billion outflow the previous week. This reflects investor caution as expectations for Federal Reserve rate cuts in 2025 wane and the quarterly earnings season unfolds.
Despite lower-than-expected core inflation and strong financial results from major firms like JPMorgan Chase and Goldman Sachs, concerns about potential tariffs under President-elect Donald Trump’s administration—on Mexico, Canada, and China—raised fears of higher inflation and slower long-term growth.
Investors sold off $4.35 billion in large-cap funds, $1.54 billion in mid-cap, $1.02 billion in multi-cap, and $379 million in small-cap funds. Sectoral funds also saw $428 million in outflows, reversing a $35 million inflow from the prior week. However, the financial sector remained a bright spot, drawing $752 million in net investments.
In contrast, U.S. bond funds gained traction, with $6.18 billion in net inflows—the second increase in five weeks. General domestic taxable fixed income funds led the way with $2.33 billion in inflows, followed by $2.15 billion in short-to-intermediate government and treasury funds, and $1.42 billion in loan participation funds.
Meanwhile, money market funds faced significant divestment, with $60.07 billion in outflows, ending three weeks of net purchases.
The week highlighted mixed investor sentiment, balancing optimism in select financial sectors against broader concerns over macroeconomic risks and potential policy changes.
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