As of the week ending August 26, U.S. equity funds saw a net outflow of $22.33 billion, marking the largest single-week outflow since March of this year. The withdrawal of funds was mainly concentrated in large-cap stock funds, indicating that investors reduced their overall exposure to the U.S. stock market ahead of NVIDIA's financial report and the Jackson Hole Symposium speeches.
Large-cap stock funds are under the most obvious pressure.
Structurally speaking, this round of redemptions does not represent a complete withdrawal from risky assets. U.S. large-cap stock funds saw a net outflow of $24.73 billion that week, but mid-cap stock funds experienced a net inflow of $2.24 billion, and small-cap stock funds also recorded a net inflow of approximately $794 million.
This means that some of the funds are more likely to be adjusting their positions rather than completely withdrawing from the stock market. Compared to large-cap stocks, small and medium-cap strategies are still attracting some additional capital.
Globally, equity funds saw a net outflow of $5.87 billion for the week, ending a streak of 13 consecutive weeks of net inflows.
There is still capital inflow into the technology sector.
Despite the overall pressure on U.S. stock funds, interest in technology-themed funds has not significantly weakened. U.S. technology funds attracted approximately $1.81 billion that week, while global technology funds saw a net inflow of about $3.2 billion.
NVIDIA's performance outlook provides support for the sector. The report mentions that the company expects its revenue to grow by about 70% in the next fiscal year, even though supply constraints have not yet been fully alleviated.
Bond funds continue to attract capital
In contrast to the outflow from stock funds, bond funds continued to attract capital allocation. American bond funds saw a net inflow of $7.12 billion that week, marking the 19th consecutive week of net inflows. Globally, bond funds had a net inflow of $10.25 billion, although this was the weakest level in nearly four weeks.
Among them, global short-term bond funds saw a net inflow of $6.29 billion, the highest in seven weeks. This reflects that investors are becoming more cautious in their asset allocation amid inflationary pressures, high U.S. Treasury yields, and the possibility that the Federal Reserve may continue to tighten its policies.
The report also indicates that the current statistical period ended on August 26, which is earlier than the time when Jackson Hole remarks drove up yields. This means that the selling of large-cap stocks began before the latest policy signals appeared. The data on fund flows in the coming week will more directly reflect the change in capital attitudes after the remarks.
