US equity funds logged the largest weekly outflow in three months in the week through June 18 as intensifying Israel-Iran tensions and persistent concerns over the economic impact of elevated US tariffs drove investors to reduce risk exposure.
According to LSEG Lipper data, investors exited US equity funds of $18.43 billion during the week, posting the largest weekly net figure since March 19.
As a week-old air war between Israel and Iran intensified, the White House on Thursday said President Donald Trump will decide in the next two weeks whether the US will get involved in the war.
Investors ditched a robust $19.38 billion worth of large-cap equity funds – the largest weekly net figure since March 19. The small-cap and mid-cap segments also witnessed approximately $2.4 billion and $1.5 billion worth of net withdrawals.
US sectoral funds, however, were popular for a fourth straight week, drawing in roughly $855 million in net inflows.
The tech and industrial sectors secured a noteworthy $1.85 billion and $445 million, respectively, in net purchases, while the financial sector lost a significant $1.22 billion in net selling.
US bond fund inflows, meanwhile, dropped to a seven-week low of $2.79 billion during the week.
The short-to-intermediate investment-grade funds, and short-to-intermediate government and treasury funds segments received just $642 million and $616 million, respectively, compared with approximately $2.37 billion and $1.02 billion worth of weekly net purchases in the prior week.
Demand for mortgage funds was, however, at a five-week high as these funds attracted weekly net inflows of $566 million.
Money market funds were meanwhile out of luck for a second successive week with weekly disposals worth a net of $7.75 billion.
Investors will focus on the Israel-Iran conflict and US economic data releases this week to assess the near-term outlook for stocks, as the S&P 500 hovers just below its February highs.
The S&P has rebounded sharply from its early-April selloff, as tariff-related tensions have eased. However, the US benchmark index appears to be taking a breather at some 2.7 percent below its February closing high. The index has gone 27 trading sessions since coming within 5 percent of its February high but has not yet set a new record.
With Israel and Iran trading missiles, escalating threats of a sweeping conflict in the Middle East sent oil prices sharply higher and led to caution in markets.
