Chart - U.S. equity funds see net outflows for the fourth consecutive week amid concerns over inflation and interest rates

Reuters, September 18 - For the week ending September 18, U.S. equity funds saw net outflows for the fourth consecutive week, as rising crude oil prices heightened inflation concerns and expectations of Federal Reserve rate hikes made investors even more cautious ahead of the central bank's policy decision.

According to LSEG Lipper data, U.S. equity funds had net redemptions of $31.44 billion for the week, virtually unchanged from the previous week's $32 billion in outflows.

Crude oil prices rose to a four-month high during the week, intensifying inflation worries and pushing up Treasury yields, placing pressure on growth funds.

On Wednesday, the Federal Reserve link raised its rate by 25 basis points and signaled that further tightening may be needed to curb inflation driven by rising energy costs linked to the war involving Iran.

Investors redeemed $28.71 billion from U.S. large-cap funds, $1.73 billion from mid-cap funds, and $3.16 billion from multi-capitalization funds. In contrast, small-cap funds saw an inflow of $568 million for the week.

Meanwhile, sector equity funds recorded a weekly net inflow of $2.29 billion—a seven-week high—with financials, consumer discretionary, and technology leading the way, attracting net purchases of $1.37 billion, $795 million, and $775 million, respectively.

At the same time, global bond funds saw net purchases fall to $554 million, a five-month low.

Among these, short-to-intermediate-term government bond and U.S. Treasury funds led, drawing inflows for an 11th consecutive week totaling $3.49 billion. Meanwhile, municipal bond funds and short-to-intermediate-term investment-grade bond funds saw significant outflows of $1.81 billion and $817 million, respectively.

Money market funds posted net outflows of $5.887 billion for the week, marking the largest single-week redemption since July 15.

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