U.S. money market funds see massive inflows in week to March 24

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(Reuters) – Investments into U.S. money market funds surged to an 11-month high in the week to March 24, on concerns over rising coronavirus cases in Europe and the cost of infrastructure spending and potential tax increases to pay for U.S. President Joe Biden’s $1.9 trillion relief bill.

U.S. money market funds secured a net $60.16 billion in the week, the highest since April 2020, data from Refinitiv Lipper showed.

Graphic: Fund flows into global equities bonds and money markets – https://fingfx.thomsonreuters.com/gfx/mkt/jznvngmakpl/Fund%20flows%20into%20global%20equities%20bonds%20and%20money%20markets.jpg

A retreat in U.S. bond yields lured money inflows into U.S. equity funds, which saw net purchases of $14.1 billion; however, it was 27% lower than in the previous week.

The inflows were mainly into large-cap funds, with mid-cap and small-cap funds facing outflows, which indicated investors’ preference toward safer stocks amid soaring global risks.

U.S. value funds saw an inflow of just $339 million, the lowest in three weeks, while growth funds attracted over $4 billion for a second successive week.

Graphic: Flows into U.S. based equity sector funds – https://fingfx.thomsonreuters.com/gfx/mkt/xklpyrlxovg/Flows%20into%20U.S.%20based%20equity%20sector%20funds.jpg

Since the start of this year, investors were putting more money into U.S. value funds, which have holdings in undervalued cyclical sectors such as financials and industrials stocks on bets over economic recovery hopes.

However, the lackluster inflows into value funds this week indicates a turnaround in optimism over an economic rebound.

Meanwhile, U.S. bond funds received $4.1 billion worth of money in the week, a 56% drop from the previous week.

Graphic: Fund flows into U.S. growth and value funds – https://fingfx.thomsonreuters.com/gfx/mkt/bdwvkmyomvm/Fund%20flows%20into%20U.S.%20%20growth%20and%20value%20funds.jpg

U.S. taxable bond funds received $3.69 billion in inflows, about 54% less compared with the previous week, while U.S. municipal bond funds got $455 million, a 67% drop.

Meanwhile, U.S. high-yield funds saw outflows of $1.7 billion after some meager inflows in the last week.

Graphic: Flows into U.S. bond funds – https://fingfx.thomsonreuters.com/gfx/mkt/yxmpjwyzmvr/Flows%20into%20U.S.%20bond%20funds.jpg