US equity funds posted their first weekly outflow in three weeks in the week ended July 15, as a sharp decline in semiconductor stocks and escalating geopolitical tensions involving the United States and Iran dampened investor sentiment, offsetting support from strong corporate earnings and easing inflation, according to Reuters citing LSEG Lipper data.
Investors withdrew a net $4.8 billion from U.S. equity funds during the last week, reversing the inflow trend seen over the previous two weeks.
The shift in sentiment came as semiconductor stocks faced heavy selling after a strong rally in the previous quarter. The Philadelphia Semiconductor Index has declined about 8.48% so far this week after surging nearly 87.75% in the prior quarter.
Several major chipmakers led the declines, with SanDisk falling 26.35%, Marvell Technology dropping 20.15%, and Intel losing 11.71%, reflecting growing concerns over stretched valuations in the sector.
Growth funds reverse course
Reuters reported that investors pulled a net $7.18 billion from U.S. growth funds during the week, reversing the previous week's net inflow of $4.23 billion.
In contrast, value-oriented funds continued to attract investor interest, recording $3 billion in net inflows for a third consecutive week, suggesting a rotation toward relatively defensive investment strategies.
Technology inflows moderate
Among sector-focused funds, technology funds continued to receive fresh investments, although inflows slowed to a three-week low of $1.57 billion.
Healthcare funds remained in demand, attracting $465 million in net inflows. Meanwhile, investors reduced exposure to consumer-focused sectors, withdrawing around $579 million from consumer discretionary funds and $409 million from communication services funds.
Bond funds extend winning streak
Demand for fixed-income investments remained robust, with U.S. bond funds registering inflows for a 13th consecutive week.
Overall, bond funds attracted $9.89 billion during the reporting period. Investors allocated $2.38 billion to short-to-intermediate investment-grade bond funds, $1.47 billion to short-to-intermediate government and Treasury funds, and $1.36 billion to municipal debt funds.
Money market funds see sharp withdrawals
US money market funds experienced significant redemptions during the last week, recording $68.03 billion in net outflows.
According to Reuters, this marked the largest weekly withdrawal from money market funds since the week ended April 15, indicating that investors may be reallocating capital into other asset classes despite heightened market volatility.
