US investors extend equity fund sell-off amid rising bond yields
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2023-10-27 21:54
U.S. investors remained net sellers of equity funds in the week to Oct. 25 driven by higher bond

U.S. investors remained net sellers of equity funds in the week to Oct. 25 driven by higher bond yields and concerns over the Israel-Hamas conflict.

According to LSEG data, investors divested a net $2.69 billion worth of U.S. equity funds in the week, registering their sixth consecutive week of net selling.

The yield on U.S. 10-year Treasury bonds climbed to a 16-year peak earlier this week, breaching the 5% mark, driven by expectations of robust growth and a growing fiscal deficit.

In terms of fund categories, U.S. multi-cap, mid-cap, and small-cap funds saw outflows of $2.52 billion, $1.35 billion, and $202 million, respectively. By contrast, large-cap funds attracted inflows of $3.41 billion, the highest in six weeks.

Investors reduced their exposure to financials, healthcare, and consumer discretionary sector funds by $841 million, $511 million, and $313 million, respectively. On the other hand, they allocated $823 million to the technology sector.

Meanwhile, investors sold a net $719 million of U.S. bond funds, a significant decrease from the $3.55 billion net selling in the previous week.

Short/intermediate investment-grade and inflation-protected funds accounted for $1.96 billion and $1.02 million in net selling, respectively. Government bond funds, on the other hand, received a notable $4.47 billion, a substantial increase from the $929 million in net buying the previous week.

At the same time, money market funds attracted $22.7 billion in inflows, rebounding from two consecutive weeks of outflows.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru)

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