US Equity Funds Attract $37.6 Billion, Ending Five-Week Outflow Streak

U.S. equity funds recorded their first net inflows in five weeks, attracting $37.6 billion for the week ended September 25, as renewed enthusiasm for artificial intelligence and a retreat in oil prices spurred investor demand. The influx marked the largest weekly net purchase since June 17, according to data from LSEG Lipper.

Large-Cap Tech Leads the Way

The flow of capital was heavily concentrated in the largest companies, signaling a targeted rather than broad-based market confidence. U.S. large-cap equity funds received $36.62 billion, their most significant weekly inflow since June 24. This was supported by a rally in technology shares, reportedly boosted by strong consumer adoption of new AI applications.

In contrast, smaller segments of the market continued to see withdrawals. Investors pulled a net $1.02 billion from small-cap funds and $372 million from mid-cap funds, while multi-cap funds saw modest inflows of $395 million.

A Closer Look at Sector and Bond Flows

The renewed interest in technology was clear in sector-specific data, while bond funds also saw a significant jump in demand.

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• Technology funds were the primary beneficiaries among sectors, attracting $4.89 billion, their largest weekly inflow since July 29.
• Consumer discretionary funds also saw positive flows, with investors adding $515 million.
• Financial sector funds, however, faced significant withdrawals totaling $2.53 billion.

Meanwhile, U.S. bond funds saw inflows surge to $5.93 billion from just $562 million the previous week. Money market funds also reversed a two-week outflow streak, attracting approximately $11 billion in net investments.

Rising Yields Present Headwind

Despite the strong equity inflows, a sharp rise in long-term government bond yields tempered overall risk appetite. The 30-year Treasury yield climbed to a 22-year high of 5.5016% during the week, reflecting mounting expectations of further policy tightening by the Federal Reserve.

Elevated yields can present a headwind for equities by increasing the relative attractiveness of safer, fixed-income assets and raising borrowing costs for corporations and consumers.