U.S. Equity Funds See Consecutive Outflows Amid Tariff Fears

U.S. equity funds endured their second successive week of capital flight during the week through May 28, spurred by persisting tariff threats from President Donald Trump and concerns over escalating borrowing costs. Data from LSEG Lipper revealed that investors extracted a net $5.46 billion from U.S. equity funds, following the previous week's $11.02 billion in withdrawals.

Small-cap funds were particularly hard-hit, experiencing their largest weekly outflow since April 30 with $2.39 billion leaving. Large-cap and mid-cap funds weren't immune either, facing net outflows of $5.46 billion and $1.02 billion, respectively. Despite this, sectoral funds bounced back with a net inflow of $1.46 billion, buoyed by technology and industrial sectors which attracted $1.4 billion and $499 million, respectively.

In contrast, the bond market appeared more resilient, with U.S. bond funds enjoying their sixth consecutive week of net inflows, amounting to $6.98 billion. The influx was spearheaded by short-to-intermediate investment-grade funds, which saw their largest inflow since March 5, at $1.89 billion. U.S. government bond funds and general domestic taxable fixed-income funds also benefitted from investor interest.

(With inputs from agencies.)