US equity funds suffer outflows amid rate worries, Middle East conflict

(Reuters) – U.S. equity funds suffered substantial outflows in the week ending Oct. 11, driven by concerns over persistent higher U.S. interest rates and escalating geopolitical tensions in the Middle East.

According to LSEG data, U.S. equity funds experienced about $5.68 billion worth of outflows during the week, a fourth weekly net selling in a row.

Data on Thursday showed an increase in U.S. consumer prices in September, including a surprise surge in rental costs, which increased market jitters about the Federal Reserve hiking interest rates again this year.

By segment, equity small-, mid-, large-, and multi-cap funds were hit with outflows of $1.77 billion, $1.11 billion, $972 million, and $343 million, respectively.

Among U.S. equity sectors, consumer discretionary, healthcare, and financials, having outflows of $430 million, $390 million, and $326 million, respectively, led net selling. Investors still poured about $360 million into utilities.

U.S. bond funds, meanwhile, lured $1.04 billion worth of net purchases, the first weekly inflow in three weeks.

U.S. short/intermediate government and Treasury funds drew $3.82 billion, the biggest weekly inflow since mid-March.

Short/intermediate investment-grade funds also received around $1.1 billion on a net basis, but U.S. emerging markets debt and high-yield funds posted $1.05 billion and $2.5 billion worth of outflows, respectively.

In the same period, investors withdrew about $9.84 billion from U.S. money market funds after two weeks of net buying in a row.