U.S. equity funds draw second straight weekly inflow as AI demand offsets yield pressure

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U.S. equity fund inflows

Highlights

U.S. equity funds record net inflows of $20.6 billion for the week ending September 30, down from $37.49 billion the prior week, driven by AI optimism.
Large-cap equity funds lead with $19.33 billion inflows, while sector funds see $4.1 billion in outflows, notably $3.79 billion from technology and $738 million from industrials.
U.S. bond funds attract $6.45 billion in net inflows, the highest in three weeks, as money market funds post $41.36 billion in outflows.

Fund flows through September 30

As reported by Reuters, citing LSEG Lipper data, U.S. equity funds record net inflows of $20.6 billion in the week through September 30, after attracting $37.49 billion a week earlier.

AI-related optimism continues to underpin sentiment in equities. The Nasdaq Composite reaches record highs last week, and U.S. stocks remain supported this week even as 10-year Treasury yields touch 24-year highs. Micron Technology on Wednesday forecasts revenue above estimates, signaling continued demand for AI memory chips.

A Commerce Department report on Wednesday shows U.S. inflation rises less than expected in August, while July price pressures are revised to a more moderate level than first reported. That reduces the urgency for the Federal Reserve to raise rates again in October.

Among equity categories, U.S. large-cap funds attract $19.33 billion, their second-largest weekly inflow of the past quarter. Multi-cap funds draw $1.01 billion and small-cap funds add $223 million, while mid-cap funds post outflows of $329 million.

Bond demand rises as sector funds lag

Sectoral equity funds, however, post net weekly outflows of $4.1 billion, led by net sales of $3.79 billion in technology funds and $738 million in industrials.

U.S. bond funds see net weekly inflows of $6.45 billion, the largest in three weeks. Short-to-intermediate government and Treasury funds pull in $4.3 billion, their biggest inflow in four weeks, while general domestic taxable fixed-income funds attract $4.02 billion. Investors, however, withdraw a net $2.28 billion from short-to-intermediate investment-grade funds.

Money market funds post weekly outflows of $41.36 billion, marking their third week of net redemptions in the past four weeks. The pattern suggests some investors continue to shift cash allocations even as elevated yields keep fixed-income markets in focus.

In our earlier coverage of global fund flows through September 30, we noted that equity funds continued to draw sizable inflows as AI investment optimism and softer U.S. inflation supported risk appetite. The report also highlighted sharp money market outflows and a pullback in technology sector funds, alongside continued—though uneven—demand for bonds as yields rose.

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