Investors Pour 37 Billion Dollars Into U.S. Equity Funds

Equity funds in the United States recorded their most substantial weekly inflows in four months, driven by shifting geopolitical expectations and a pivot in investor sentiment. Investors poured a net $37.24 billion into these funds during the week ending March 25, marking the highest level of interest since mid-November 2024 and reversing a three-week trend of net selling, according to LSEG Lipper data. The surge in sentiment followed reports that military strikes against energy infrastructure in Iran had been postponed in favor of a proposed deal to end the regional conflict. However, market volatility persisted as the tech-heavy index managed by Nasdaq, Inc. fell by more than 2% on Thursday. This decline was triggered by continued denials from Iranian officials regarding the existence of formal negotiations, casting doubt on a rapid resolution to the month-long hostilities. Large-cap funds were the primary drivers of the recovery, securing a net $45.07 billion in their first week of inflows in seven weeks. In contrast, mid-cap and small-cap funds experienced net outflows of $2.15 billion and $1.24 billion, respectively. Sector-specific funds also struggled, losing a net $2.9 billion—the largest withdrawal since late December. Within this category, technology funds saw $1.45 billion in exits, while gold and precious metals lost $974 million and healthcare shed $507 million. Fixed-income markets showed mixed results. Bond funds attracted $7.56 billion, a decrease from the $12.05 billion recorded the prior week. Short-to-intermediate government and treasury funds were a notable bright spot, receiving $9.07 billion in their largest weekly purchase since at least May 2024. Meanwhile, money market funds saw a massive reversal with $57.96 billion in net withdrawals, terminating a five-week period of steady accumulation.