U.S. equity funds notch up biggest weekly inflow in seven weeks

BY Reuters | ECONOMIC | 08/12/22 09:32 AM EDT

(Reuters) - Investors were net buyers of U.S. equity funds in the week to Aug. 10, on bets that the Federal Reserve would slow the pace of its interest rate hikes as inflation concerns subside.

Refinitiv Lipper data showed $4.21 billion in net purchases of U.S. equity funds, their biggest weekly inflow since June 22.

GRAPHIC: Fund flows: US equities, bonds and money market funds

Data released on Wednesday showed U.S. consumer prices were unchanged in July, prompting some traders to cut bets to a 50 bps hike at the Fed's September meeting.

Some market participants were earlier anticipating a third straight 75 bps interest rate increase in September.

U.S. small-cap funds attracted $192 million, while large-cap funds had purchases of $7.6 billion, the biggest inflow since May 25. Mid-cap funds recorded $294 million of net selling.

Data for growth and value funds showed investors acquired funds totalling $2.46 billion and $26 million respectively.

GRAPHIC: Fund flows: US growth and value funds

U.S. consumer staples and healthcare funds notched up inflows of $487 million and $345 million respectively, but tech funds saw outflows of $852 million.

GRAPHIC: Fund flows: US equity sector funds

Meanwhile, bond funds witnessed inflows of $1.15 billion, as purchases continued for a second straight week.

U.S. bond fund purchases were broadly into government funds, with U.S. government and treasury fixed income funds, and U.S. short/intermediate government and treasury funds attracting $1.88 billion and $540 million, respectively.

GRAPHIC: Fund flows: US bond funds

Money market funds had disposals of $12.19 billion as net selling continued for a second week.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Alexander Smith)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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