The second consecutive week of outflows from U.S. equity funds occurred as investors removed $5.46 billion during the period ending May 28 according to LSEG Lipper data. Investors have become more cautious about President Donald Trump’s tariff threats and rising borrowing costs which led to the current market pullback.
The week brought the largest small-cap equity fund withdrawals since late April with investors pulling $2.39 billion from these funds. Large-cap and mid-cap funds experienced net outflows amounting to $5.46 billion and $1.02 billion respectively.
The sector-focused funds received $1.46 billion in investments during this week after showing a decline the previous week. The technology and industrial sectors received $1.4 billion and $499 million respectively from investors who maintained their confidence in these sectors despite market uncertainties.
U.S. bond funds received $6.98 billion in net inflows during their sixth consecutive week of growth. The weekly inflows to short- to intermediate-term investment-grade funds reached their highest level since early March at $1.89 billion while government bond funds and general taxable fixed income funds received substantial investor interest.
Market participants are withdrawing their investments from equities because they want to avoid potential trade disruptions and economic slowdowns caused by Trump’s protectionist policies. The ongoing search for yield enables investors to maintain their fixed income investments despite their concerns about market risks.
The market uncertainty about trade policy continues to drive investors away from riskier assets even though U.S. economic indicators show stability.
