Investors Pull $6.65 Billion From US Equity Funds Ahead of AI Earnings

Investors withdrew a net $6.65 billion from US equity funds during the week ended October 28. LSEG Lipper data shows this marks the first weekly outflow since October 7. The move reflects growing caution among traders before earnings releases from major artificial intelligence companies.

Large-cap funds lost $3.8 billion, partially erasing $8.72 billion in inflows recorded the previous week. Mid-cap funds shed $2.11 billion, while small-cap funds dropped $832 million. Multi-cap funds also saw a net exit of $303 million.

The caution stems from concerns about the rising cost of AI infrastructure. Microsoft reported strong cash-flow results earlier in the week and forecast robust cloud growth. This performance suggested its heavy AI investments are yielding returns. However, Alphabet and Amazon failed to meet investor expectations with their own results.

Sectoral funds attracted $3.52 billion in net purchases, the highest weekly total in three weeks. Technology funds drove this surge with $4.54 billion in net buying. Conversely, financial and healthcare sector funds recorded outflows of $713 million and $701 million, respectively.

Fixed-income markets showed mixed activity. US bond funds attracted $2.04 billion, recovering from a net $969 million in sales the prior week. Municipal debt funds saw $1.74 billion in net purchases, while general domestic taxable fixed-income funds drew $1.31 billion. Inflation-protected funds recorded $1.08 billion in net purchases.

Government and Treasury funds experienced outflows of $2.48 billion. Short- to intermediate-term investment-grade funds lost $1.59 billion. Money market funds recorded net outflows of $47.66 billion, a sharp reversal from the $14.97 billion in inflows seen the previous week.