During the week concluding January 21, U.S. equity funds endured notable withdrawals, driven by investors adopting a more cautious stance amid geopolitical uncertainties surrounding President Donald Trump's tariff announcements targeting European countries due to disputes involving Greenland.
Specifically, equity funds registered a net outflow totaling $5.26 billion, counteracting part of the robust demand reflected in the prior week's net inflows of approximately $28.17 billion. The retreat in risk-taking became evident across all segments of the U.S. equity market. Large-cap funds saw net redemptions amounting to $12.94 billion, small-cap funds experienced $2.1 billion in outflows, and mid-cap funds had $1.21 billion withdrawn.
Although broad equity funds faced withdrawals, certain sector-focused funds presented pockets of resilience. Financial sector funds attracted roughly $1.5 billion in net inflows, metals and mining funds pulled in about $904 million, and healthcare funds garnered around $615 million, contributing to a combined sector fund inflow of approximately $3.3 billion.
Fixed-income markets reflected a deceleration in weekly net investments, which tapered to a three-week low of $5.9 billion. Demand for short-to-intermediate investment-grade bond funds exhibited a stronger profile, escalating by 44% to reach net inflows of $3.05 billion, compared to $2.11 billion the previous week. Additional fixed-income categories, including general domestic taxable funds, municipal debt, and short-to-intermediate government and Treasury funds, recorded net inflows of $1.1 billion, $994 million, and $827 million, respectively.
Conversely, money market funds encountered sustained redemption pressure, with investors withdrawing a net $34.93 billion for the second consecutive week, signaling a shift in cash management preferences amid prevailing market uncertainties.