(Reuters) - Investors reduced holdings in U.S. equity funds for the fifth consecutive week through Sept. 25, driven by lingering concerns about the economy's health and caution ahead of the U.S. presidential election.
According to LSEG data, investors divested a massive $22.43 billion worth of US equity funds during the week, which was their largest weekly net sales since December, 2022.
Weak U.S. consumer confidence last week heightened investor concerns about the labor market's health, fuelling worries that the Fed's unusual 50 basis-point rate cut was in response to a significant economic slowdown.
By segment, U.S. large-cap equity funds experienced substantial outflows of $15.23 billion, the largest weekly net selling since December, 2022. Additionally, investors withdrew a net $2.34 billion, $2.08 billion, and $998 million from small-cap, multi-cap, and mid-cap funds respectively.
Among sectoral funds, investors withdrew $539 million from the consumer staples sector, reversing three consecutive weeks of net purchases. Real estate, industrials and financials sectors each saw approximately $400 million in outflows during the week.
Meanwhile, U.S. bond funds attracted $6 billion in net purchases, continuing a streak with their 17th consecutive weekly inflow.
Leading the pack, US short-to-intermediate government and treasury funds recorded about $3.13 billion in inflows, the highest in four weeks. Additionally, US general domestic taxable and short-to-intermediate investment-grade funds also saw significant net purchases, totalling $2.21 billion and $1.17 billion respectively.
U.S. investors, meanwhile, acquired money market funds of a net $112.57 billion, which was their largest weekly net purchase since at least Dec. 2020.