U.S. equity funds recorded their biggest outflows in 12 weeks for seven days ended June 21 as the Federal Reserve's hawkish stance sparked worries of more rate hikes this year.
Investors offloaded U.S. equity funds worth a net $16.47 billion in their biggest weekly net selling since March 29. They had bought into funds worth $19.7 billion just a week ago.
Fed Chair Jerome Powell stuck to the central bank's plan of bringing inflation back to the 2% target in his congressional testimony on Wednesday, fanning fears among market participants that such a move could tip the economy into a recession.
He also noted that a majority of policymakers saw two more quarter-point rate increases as likely by the year-end. U.S. equity funds of all sizes recorded outflows, with large caps losing $7.54 billion, small caps shedding $2.63 billion, multi caps giving up $1.04 billion and mid caps dropping $138 million.
Sectorwise, healthcare, industrials and tech took the biggest beating, with outflows of $906 million, $199 million and $158 million, respectively, but financials still attracted $933 million worth of net purchases.
Meanwhile, U.S. investors remained net buyers of bond funds for a second successive week, with net purchases of about $2.58 billion.
They piled into U.S. government and general domestic taxable fixed income funds, with a net $1.21 billion and $1.03 billion, respectively, in purchases, while exiting about $603 million worth of inflation-protected funds in a 10th straight week of net selling.
U.S. money market funds also recorded $21.14 billion worth of outflows, in a second consecutive week of net selling.
(Reporting by Gaurav Dogra and Patturaja Murugaboopathyin Bengaluru; Editing by Anil D'Silva)
