US equity funds post outflows as yields spike

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People wearing surgical masks walk past a screen showing Nikkei index outside a brokerage in Tokyo, Japan February 3, 2020. REUTERS/Kim Kyung-Hoon

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Jan 21 (Reuters) - U.S. equity funds faced outflows in the week to Jan. 19 on concerns over a rise in U.S. Treasury yields and a feeble start to the fourth-quarter earnings season.

According to Refinitiv Lipper data, investors sold U.S. equity funds of $4.5 billion, marking the first weekly outflow in five weeks.

Fund flows: US equities bonds and money market funds

The U.S. 10-year Treasury yields jumped to two-year highs, which in turn battered growth stocks, as the companies' future cash flows would be worth less when discounted with higher interest rates.

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Bank earnings didn't cheer investors during the week as Goldman Sachs (GS.N) missed quarterly profit expectations, while JPMorgan Chase & Co (JPM.N) warned that its return on tangible capital equity may fall below its medium-term target of 17% this year. read more

U.S. growth funds saw outflow of $4.42 billion in a fourth successive week of net selling, however, investors secured value funds worth about $3 billion in their biggest weekly purchase in five months.

Fund flows: US growth and value funds

Among sector funds, financials obtained inflows of $1.12 billion, while tech and consumer discretionary sector funds saw outflows of $842 million and $543 million respectively.

Fund flows: US equity sector funds

U.S. bond funds witnessed $1.69 billion worth of net selling, less than the outflows of $3.15 billion in the previous week.

Investors sold U.S. taxable bond funds of $1.39 billion, while U.S. municipal bond funds faced their first weekly net selling in six weeks, worth $466 million.

U.S. high yield, and short/intermediate investment-grade funds faced money outgo worth $2.29 billion and $702 million respectively. However, loan participation funds, and short/intermediate government & treasury funds received inflows of $2.2 billion and $1.27 billion respectively.

Fund flows: US bond funds

U.S. money market funds also faced outflow worth $57.07 billion, their biggest since mid-July 2020.

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Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Chizu Nomiyama

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