Key Facts
According to data from LSEG Lipper, U.S. equity funds experienced an outflow of $16.22 billion in the week ending May 7, marking the fourth consecutive week of withdrawals. This represents the largest weekly outflow in approximately six weeks. The uncertainty surrounding U.S. tariff policies and the ongoing U.S.-China trade negotiations has led investors to adopt a more cautious approach.
Breaking down the outflows, large-cap equity funds saw the largest withdrawals at $13.6 billion, followed by mid-cap funds with $1.12 billion and small-cap funds with $917 million. Sector-specific funds also recorded significant outflows, totaling $2.89 billion. Among these, financial sector funds lost $1.18 billion, technology funds saw $507 million in outflows, and metals and mining funds experienced $420 million in withdrawals.
In contrast, U.S. bond funds attracted $3.53 billion in inflows, the highest weekly figure in eight weeks. Short- and medium-term bond funds reversed their previous week’s trend, recording $1.15 billion in inflows after a $765 million outflow the prior week. Municipal bond funds also saw strong demand, with $1.06 billion in inflows.
Money market funds experienced a substantial inflow of $28.4 billion, the largest in nearly two months. This shift indicates a preference among investors for safer, more liquid assets amid market uncertainties.
On the international front, the U.S. reached a trade agreement with the United Kingdom on May 8, sparking cautious optimism about progress in other trade negotiations. Former President Donald Trump suggested that ongoing discussions with China could potentially lead to tariff reductions.
Despite the recent outflows from equity funds, Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, expressed confidence in U.S. equities as an attractive investment option. He projected the S&P 500 Index to reach 5,800 points by the end of the year.
Summary
U.S. equity funds saw $16.22 billion in outflows for the week ending May 7, marking the fourth consecutive week of withdrawals, according to LSEG Lipper data. This represents the largest weekly outflow in six weeks, driven by investor caution amid uncertainty over U.S. tariff policies and U.S.-China trade negotiations.
Large-cap equity funds accounted for the majority of outflows at $13.6 billion, followed by mid-cap funds with $1.12 billion and small-cap funds with $917 million. Sector-specific funds also faced significant withdrawals, totaling $2.89 billion, with financial sector funds losing $1.18 billion, technology funds $507 million, and metals and mining funds $420 million.
Conversely, U.S. bond funds attracted $3.53 billion in inflows, the highest in eight weeks. Short- and medium-term bond funds reversed the previous week’s outflows, gaining $1.15 billion, while municipal bond funds saw $1.06 billion in inflows. Money market funds experienced a notable $28.4 billion inflow, the largest in nearly two months, reflecting a shift toward safer, more liquid assets.
On May 8, the U.S. reached a trade agreement with the United Kingdom, raising cautious optimism for progress in other trade talks. Former President Donald Trump suggested potential tariff reductions in ongoing discussions with China.
