U.S. equity funds draw first weekly inflow in five weeks on AI demand

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US equity funds weekly inflow

Highlights

U.S. equity funds record $37.6 billion in net inflows for the week ended September 25, the highest since June 17, driven by technology demand.
Large-cap technology and sector funds receive strong inflows—$36.62 billion for large-caps and $4.89 billion for technology funds—while financial sector funds see $2.53 billion in withdrawals.
U.S. bond funds gain $5.93 billion in inflows amid 30-year Treasury yield spiking to 5.5016%, with money market funds reversing course to attract $11 billion.

Fund flows driven by technology demand

As reported by Reuters, citing LSEG Lipper, investors add a net $37.6 billion to U.S. equity funds in the week ended September 25, marking the largest weekly net purchase since June 17.

Funds focused on large-cap technology companies see particularly strong demand as a wider tech rally gains momentum and consumer adoption of Meta's Muse agent remains robust after it tops U.S. app-download rankings.

Within equity categories, U.S. large-cap funds take in $36.62 billion, their biggest weekly net inflow since June 24. Multi-cap funds also attract $395 million, while mid-cap and small-cap funds post outflows of $372 million and $1.02 billion, respectively.

Among sector funds, technology funds pull in $4.89 billion, the largest weekly inflow since July 29. Consumer discretionary funds add $515 million, while financial sector funds record withdrawals of $2.53 billion.

Bond and cash allocations show continued caution

Investor positioning still reflects some defensiveness as a jump in 30-year Treasury yields to a 22-year high of 5.5016% on Thursday tempers risk appetite. Markets are also weighing expectations of further Federal Reserve policy tightening.

U.S. bond fund inflows rise to $5.93 billion during the week from about $562 million a week earlier. General domestic taxable fixed-income funds absorb $4.15 billion, the largest weekly net buying since June 3.

Short-to-intermediate government and Treasury funds, short-to-intermediate investment-grade funds, and loan participation funds also record inflows of $2.15 billion, $1.63 billion, and $1.31 billion, respectively. At the same time, money market funds attract about $11 billion in net investments, ending a two-week outflow streak.

In our earlier article on the surge in U.S. Treasury yields, we looked at how the jump in 10-year and 30-year rates to multi-decade highs was lifting borrowing costs and reverberating through global markets. We also outlined how episodes of rapidly rising yields have often coincided with financial stress and pressure on risk assets, highlighting potential weak spots such as regional banks, housing-related sectors, and debt-funded investment areas like private credit.

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