(Reuters) – U.S. equity funds attracted massive inflows in the week to June 23, as investors bet on a faster economic recovery from the pandemic and shrugged off concerns the Federal Reserve might raise interest rates sooner than expected.
Data from Refinitiv Lipper showed investors put a net $16.1 billion into U.S. equity funds in the week to Wednesday, the most since the week ended March 17.
Graphic: Fund flows into U.S. equities bonds and money market – https://fingfx.thomsonreuters.com/gfx/mkt/jbyprzjyxpe/Fund%20flows%20into%20U.S.%20equities%20bonds%20and%20money%20market.jpg
The Nasdaq and S&P 500 U.S. stock indexes scaled new peaks this week, with investors cheering data that showed record U.S. factory activity in June..
U.S. large-cap funds attracted a net $13.4 billion, their biggest inflow since January 2018, while mid-cap funds and small-cap funds lagged behind.
The data showed U.S. growth funds received a net $1.5 billion, while value funds faced outflows worth $2.4 billion.
The higher inflows into growth stocks came as investors shifted their focus back to tech and other high-flying growth stocks as the allure of value stocks diminished after the Fed’s hawkish tilt last week.
However, Mark Haefele, chief investment officer at UBS Global Wealth Management, said value stocks could regain the lead over growth stocks.
“The forward price-to-earnings ratio of growth relative to value is at a post-dotcom bubble high, at close to a 1.8x premium,” he said in a note.
“Simply stated, relative valuations for growth companies look vulnerable, especially if interest rates rise.”
Graphic: Flows into U.S. equity sector funds – https://fingfx.thomsonreuters.com/gfx/mkt/rlgpdrwyqpo/Flows%20into%20U.S.%20equity%20sector%20funds.jpg
Graphic: Fund flows into U.S. growth and value funds – https://fingfx.thomsonreuters.com/gfx/mkt/xegvbzkdevq/Fund%20flows%20into%20U.S.%20growth%20and%20value%20funds.jpg
Meanwhile, U.S. money market funds faced $29.5 billion worth of outflows, the biggest in six months.
U.S. bond funds had inflows worth $2.8 billion in the week, the lowest in four weeks.
U.S. municipal bond funds attracted $1.73 billion in inflows, while U.S. taxable bond funds saw a net $2.06 billion of inflows, the smallest in 15 weeks.
Graphic: Flows into U.S. bond funds – https://fingfx.thomsonreuters.com/gfx/mkt/xklvyxkwopg/Flows%20into%20U.S.%20bond%20funds.jpg
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Mark Potter)