US equity funds see sharp inflows ahead of inflation data

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., June 24, 2024. REUTERS/Brendan McDermid/File Photo

(Reuters) - U.S. investors heavily bought into equity funds ahead of a crucial inflation report spurred by expectations of continued moderation in inflation that could prompt the Federal Reserve to announce rate cuts.

They pumped a robust $16.37 billion into U.S. equity funds during the seven days to June 26, the highest amount in a week since June 14, 2023.

Investors awaited the 1230 GMT release of the Federal Reserve's favored inflation gauge, the personal consumption expenditures (PCE) price index, expecting a moderation to an annual growth rate of 2.6% in May.

U.S. large-cap funds led the market, attracting a significant $21.28 billion, the largest weekly inflow since at least September 2020, while small-cap funds also saw net inflows of $38 million. In contrast, mid-cap and multi-cap funds experienced outflows of $690 million and $186 million, respectively.

Meanwhile, investors withdrew $141 million from U.S. sectoral equity funds, reversing three weeks of net purchases. Specifically, they pulled $391 million from healthcare funds and $302 million from real estate funds but invested $452 million in industrials.

U.S. bond funds experienced approximately $1.64 billion in net purchases, marking the fourth consecutive week of inflows. U.S. government and treasury fixed-income funds attracted about $2.05 billion, continuing the buying trend for the seventh straight week.

Additionally, U.S. general domestic taxable fixed-income funds saw $1.26 billion in inflows, although there were withdrawals worth about $1.14 billion from short/intermediate investment-grade funds.

At the same time, money market funds saw $6.54 billion worth of net selling, the second weekly outflow in a row.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Tasim Zahid)