GRAPHIC-US money market funds draw sharp inflows in the week to Oct. 2

BY Reuters | ECONOMIC | 10/07/24 09:36 AM EDT

Oct 7 (Reuters) - U.S. money market funds saw massive inflows in the week to Oct. 2 as investors sought safer assets on caution ahead of a key payrolls report amid heightened geopolitical concerns in the Middle East.

They acquired U.S. money market funds of a net $41.32 billion during the week following about $113.11 billion worth of net purchases in the previous week, according to LSEG Lipper data.

A stronger-than-expected September non-farm payrolls report on Friday, however, eased worries about the health of U.S. labour market and pared back market bets of a larger Fed rate-cut in November.

U.S. equity funds also gained a significant $30.8 billion worth of inflows during the week, the largest amount since at least December 2020.

Large-cap equity funds garnered a hefty $35.49 billion, the highest inflow since at least January 2019. U.S. investors, however, divested mid-cap, multi-cap, and small-cap funds of a net $1.94 billion, $1.72 billion and $1.31 billion, respectively.

Among sectoral funds, real-estate, utilities and industrial sectors drew $461 million, $356 million and $321 million worth of inflows, respectively, while healthcare and financials suffered $919 million and $537 million worth of net selling.

Demand for U.S. bond funds, meanwhile, eased to the lowest in four weeks as they obtained about $2.8 billion in net purchases.

U.S. short-to-intermediate government and treasury funds had 5.03 billion worth of net sales following three weekly inflows in a row.

Investors, meanwhile, purchased short-to-intermediate investment-grade, municipal debt, and general domestic taxable fixed income funds of $3.6 billion, $1.88 billion and $852 million, respectively.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; editing by David Evans)

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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