(Reuters) -U.S. investors divested riskier equity funds and significantly invested in the safety of money market funds in the week through August 6, spooked by President Donald Trump’s new trade tariffs and discouraging economic readings.
They pulled out a net $13.7 billion from U.S. equity funds in their largest weekly sales since June 25 while channeling a net $78.85 billion – the largest amount since December 4 – into money market funds, LSEG Lipper data showed.
“Our base case remains that the U.S. effective tariff rate will settle at around 15% – enough to weigh on growth and lift inflation, but not enough to derail the U.S. economy or the equity rally,” said Mark Haefele, Chief Investment Officer at UBS Global Wealth Management.
“We expect near-term volatility to continue, but think investors should stick to their longer-term financial plan.”
The small-cap equity funds segment suffered the biggest weekly net sales since December 18, to the tune of approximately $5.2 billion. Large-cap and mid-cap funds meanwhile had a net $7 billion and $1.71 billion in weekly disposals.
Sectoral funds were, however, net recipient of $806 million worth of weekly inflows with communication services and industrials leading the way, securing a net $1.17 billion and $586 million, respectively in inflows.
Weekly net investments in bond funds, meanwhile, jumped to a 11-week high of $7.39 billion during the week.
The short-to-intermediate investment-grade funds, short-to-intermediate government and treasury funds, and municipal debt funds attracted a massive $3.22 billion, $2.43 billion and $1.66 billion, respectively in net investments.
(Reporting by Gaurav DograEditing by Gareth Jones)
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