(Reuters) - U.S. equity funds posted enormous outflows in the week to December 7 as investors fretted over the Federal Reserve's rate hikes, with data showing a rebound in employment and a pick up in the services sector.
According to data from Refinitiv Lipper, U.S. equity funds recorded withdrawals of $26.66 billion, the biggest weekly outflow since April 2021.
Graphic: Fund flows: US equities, bonds and money market funds, https://fingfx.thomsonreuters.com/gfx/mkt/znpnbbezgpl/Fund%20flows%20US%20equities%20bonds%20and%20money%20market%20funds.jpg Reports showing an upbeat U.S. services industry activity and higher-than-expected nonfarm payroll additions in November raised bets that the Federal Reserve will remain more hawkish than expected.
Investors were also worried as the biggest U.S. banks including Goldman Sachs (NYSE:GS), J.P. Morgan, and Bank of America (NYSE:BAC), warned of a recession as inflation threatens consumer demand.
U.S. equity growth funds saw $9.91 billion worth of withdrawals while value funds witnessed net disposals of $2.03 billion, as selling continued for a third straight week in each segment.
Graphic: Fund flows: US growth and value funds, https://fingfx.thomsonreuters.com/gfx/mkt/jnvwyyewnvw/Fund%20flows%20US%20growth%20and%20value%20funds.jpg Data for sectoral funds showed tech, financials and consumer discretionary funds lost $1.27 billion, $761 million and $527 million, respectively, in outflows.
Graphic: Fund flows: US equity sector funds, https://fingfx.thomsonreuters.com/gfx/mkt/gdvzqqywlpw/Fund%20flows%20US%20equity%20sector%20funds.jpg Meanwhile, U.S. bond funds received a net $992 million in inflows after witnessing weekly outflows for four weeks.
U.S. taxable bond funds had net purchases of $886 million after three weeks of selling in a row, although municipal bond funds suffered small outflows, amounting to $53 million.
U.S. investors purchased high-yield bond funds of $318 million and government bond funds of $1.06 billion in their biggest weekly net purchase since Nov. 16. Still, general domestic taxable fixed income funds recorded $794 million worth of outflow.
Graphic: Fund flows: US bond funds, https://fingfx.thomsonreuters.com/gfx/mkt/zgpobbmrovd/Fund%20flows%20US%20bond%20funds.jpg Meanwhile, U.S. money market funds obtained $36.19 billion in inflows, the biggest amount for a week since Nov. 2.