U.S. equity fund see biggest weekly outflow in 12 weeks

© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 22, 2022. REUTERS/Brendan McDermid

(Reuters) - U.S. equity funds recorded heavy capital outflows in the week to Sept. 7 as a stronger-than-expected U.S. services industry report solidified expectations that the Federal Reserve would keep hiking interest rates to control price pressures.

Some investors had expected that the Fed might temper its rate increases to avert an economic slowdown, which in turn would boost risk assets.

According to Refinitiv Lipper data, investors withdrew a net $14.83 billion out of U.S. equity funds, posting the biggest weekly outflow since June 15.

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

Investors offloaded $4.21 billion worth of U.S. growth funds in a fourth straight week of net selling, while value funds recorded outflows at $2.79 billion after a week of net purchases.

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

Sectoral funds' data showed that financials, consumer discretionary and tech, all booked outflows, amounting to a net $957 million, $849 million, and $400 million, respectively.

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

However, U.S. bond funds drew a net $1.51 billion in inflows after witnessing two straight weeks of outflows.

Taxable bond funds recorded net inflows at $2.73 billion, though municipal funds had a fifth weekly outgo, worth $1.25 billion.

Investors bought short/intermediate government & treasury funds of $5.14 billion, but high yield and loan participation funds witnessed $2.26 billion and $808 million worth of net selling.

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

Meanwhile, selling in money market funds continued for a second successive week as investors withdrew a net $5.22 billion.