US equity funds see big inflows as rate cut bets rise

(Reuters) – U.S. equity funds attracted massive inflows in the week up to Dec. 27, bolstered by expectations of early rate cuts by the Federal Reserve as data showed that inflation cooled further in November.

According to LSEG data, investors purchased a net $14.57 billion worth of U.S. equity funds during the week, marking their biggest weekly net purchase since June 14.

The U.S. personal consumption data last Friday showed that U.S. prices fell in November for the first in more than 3-1/2 years, pushing the annual increase in inflation further below 3%. U.S. large-, small-, and multi-cap funds attracted $8.93 billion, $3.63 billion and $642 million, respectively, however, mid-cap funds witnessed outflows of $665 million.

Meanwhile, U.S. sectoral equity funds had outflows of about $1.19 billion with consumer staples and healthcare witnessing $924 million and $721 million worth of net selling, respectively.

Bond funds, meanwhile, received a marginal $8 million worth of inflows after four successive weeks of outflows.

U.S. general domestic taxable fixed income funds, and short/intermediate investment-grade funds saw net purchases of $1.83 billion and $210 million, respectively. Short/intermediate government & treasury funds meanwhile, suffered outflows of about $1.92 billion.

The LSEG data also showed that U.S. investors purchased about $9.68 billion worth of money market funds after two weeks of net selling in a row.