US Equity Funds See $4.8 Billion Outflow as Chip Stocks Tumble

U.S. equity funds experienced a net outflow of $4.8 billion for the week ending July 15, marking the first weekly net withdrawal in three weeks. The reversal in sentiment came as a significant selloff in semiconductor stocks and geopolitical tensions outweighed strong corporate earnings and moderating inflation data, according to figures from LSEG Lipper.

Chip Sector Slump Spooks Investors

The primary driver of the outflows was a sharp downturn in the technology sector, particularly among chipmakers that had seen massive gains in the prior quarter. The Philadelphia SE Semiconductor Index fell 8.48% during the week, erasing some of its recent rally.

Notable declines among major semiconductor companies included:

• SanDisk: -26.35%
• Marvell Technology: -20.15%
• Intel: -11.71%

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This pullback led to a broader shift in investor strategy. Growth-oriented funds saw substantial outflows of $7.18 billion, a stark reversal from the $4.23 billion of net purchases in the previous week. In contrast, value funds attracted $3 billion, their third consecutive week of inflows.

Sector Flows and Bond Market Resilience

Across different sectors, inflows into technology funds cooled to a three-week low of $1.57 billion. Healthcare funds attracted a modest $465 million, while investors pulled money from consumer discretionary ($579 million) and communication services ($409 million) funds.

Meanwhile, U.S. bond funds continued their streak of popularity, attracting $9.89 billion for their 13th straight week of inflows. Investors allocated capital to short-to-intermediate investment-grade funds ($2.38 billion) and government and Treasury funds ($1.47 billion). In a significant move, U.S. money market funds recorded outflows of $68.03 billion, the largest weekly withdrawal since April 15.