U.S. equity funds record third weekly outflow in a row

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Illustration shows U.S. dollar banknotes

(Reuters) – U.S. equity funds witnessed outflows for the third week in a row in the week ended July 13, on pessimism over economic growth and earnings outlook as companies are hit by higher borrowing costs and lower margins.

According to Refinitiv Lipper data, U.S. equity funds faced outflows of $1.41 billion, compared with $5.45 billion worth of net selling in the previous week.

GRAPHIC: Fund flows: US equities, bonds and money market funds- https://fingfx.thomsonreuters.com/gfx/mkt/zdpxobxjzvx/Fund%20flows%20US%20equities%20bonds%20and%20money%20market%20funds.jpg

Data released this week showed U.S. consumer prices accelerated faster than economists had forecast, as the CPI jumped 9.1% in the 12 months to June, bolstering the case for more Fed rate hikes.

On Thursday, both JPMorgan Chase & Co and Morgan Stanley reported a slump in profits for the second quarter, and warned of an impending economic slowdown.

U.S. small- and mid-cap funds recorded outflows worth $2.38 billion and $81 million, respectively, but large-cap funds gained $1.98 billion in inflows.

GRAPHIC: Fund flows: US growth and value funds- https://fingfx.thomsonreuters.com/gfx/mkt/gdpzylmjzvw/Fund%20flows%20US%20growth%20and%20value%20funds.jpg

Among sector funds, consumer discretionary, tech and industrials lost $715 million, $403 million, and $307 million, respectively, in outflows, while utilities had purchases worth $298 million net.

GRAPHIC: Fund flows: US equity sector funds- https://fingfx.thomsonreuters.com/gfx/mkt/jnpwedargpw/Fund%20flows%20US%20equity%20sector%20funds.jpg

Meanwhile, safer money market funds gained about $10 billion in the second straight week of net buying.

Data showed investors withdrew $705 million out of U.S. bond funds after net purchases of $2.72 billion in the week before.

Investors disposed of U.S. short/intermediate investment-grade funds of $3.32 billion, while loan participation funds suffered outflows of $1.29 billion in a sixth consecutive week of net selling.

Meanwhile, U.S. short/intermediate government and treasury funds obtained $1.65 billion in net buying, after posting small outflows in the previous week.

GRAPHIC: Fund flows: US bond funds- https://fingfx.thomsonreuters.com/gfx/mkt/zdvxobxgzpx/Fund%20flows%20US%20bond%20funds.jpg

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Shinjini Ganguli)

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