US equity funds record second weekly outflow on Iran tensions, high yields

U.S. equity funds recorded outflows for a second consecutive week, as rising bond yields ‌and oil prices amid renewed Middle East tensions weighed ‌on sentiment, though strong results from AI-related companies helped limit the selloff.

Investors ​withdrew a net $11.12 billion from U.S. equity funds in the week through September 2, compared with $22.72 billion net outflows in the previous week, according to LSEG Lipper data.

Bond yields and oil ‌prices surged earlier ⁠this week as the U.S. struck Iranian military targets near the Strait of Hormuz, while Tehran ⁠said it had targeted U.S. assets across the region.

Strong results from Nvidia and Dell Technologies, however, signaled that the AI spending ​boom ​and related market trade remain ​intact.

U.S. large-cap equity funds recorded ‌net outflows of $7.52 billion, easing from $24.73 billion in net sales the previous week. Mid-cap funds saw outflows of $572 million, while small-cap funds recorded outflows of $1.83 billion.

Sectoral funds reported net selling of $3.48 billion for the week, led by technology, financials ‌and industrials. Technology recorded net withdrawals ​of $1.39 billion, followed by $1.31 billion and $620 ​million in financials and ​industrials, respectively.

U.S. bond fund inflows fell to ‌a five-week low of $4.27 billion during ​the week, ​though short-to-intermediate government and Treasury funds remained popular, attracting $4.53 billion.

Short-to-intermediate investment-grade funds and loan participation funds also drew a ​significant $1.53 billion and $990 ‌million, respectively.

Money market funds attracted nearly $48.76 billion, marking ​their highest weekly intake in four weeks.