U.S. equity fund demand eased in the week ended February 4 as investors pared back purchases following volatility in software shares, according to LSEG Lipper data. Net inflows into U.S. equity funds totaled $5.58 billion for the week, a roughly 48% decline from the $10.82 billion of net inflows recorded the previous week.
Large-cap funds continued to attract money, with $1.1 billion of inflows, while mid-cap and small-cap funds experienced net outflows of $1.59 billion and $1.67 billion, respectively. Sector-level activity was uneven: industrials received $2.11 billion in new investor money and metals and mining funds drew $1.44 billion, yet technology funds saw a substantial withdrawal of $2.34 billion.
Part of the caution toward software stocks followed the launch last Friday by AI developer Anthropic of a legal plug-in for its generative AI chatbot, an event that placed pressure on software shares by raising investor concerns about potential disruption within the sector. At the same time, strong earnings reports from Eli Lilly and from Super Micro Computer provided some counterbalancing support for market sentiment.
Fixed income continued to be a destination for investors during the week. U.S. bond funds logged a fifth consecutive weekly inflow, with $11.11 billion of net purchases. Short-to-intermediate investment-grade funds accounted for $6.34 billion of that total, marking the largest weekly net investment for that category since at least 2022.
Municipal debt funds attracted $2.38 billion, and inflation-protected funds drew $1.34 billion in the same week.
Money market funds saw especially large activity, with net purchases of $83.09 billion — the largest weekly inflow since a $105.08 billion net purchase in the week to December 3. The data illustrate a rotation of some investor capital away from riskier equities and into fixed income and cash-equivalent vehicles during the reporting week.
Bottom line: Equity flows slowed markedly in the week through February 4 amid software sector pressure, while bonds and money market instruments continued to attract meaningful investor funds.