Investors pulled out of U.S. bond funds heavily in the week ending April 9 in a broad selloff triggered by fears of a recession and concerns that the escalating U.S.-China trade war could fuel inflation.
Investors withdrew a net $15.64 billion from U.S. bond funds during the week, the largest amount for a week since December 21, 2022, data from LSEG Lipper showed.
U.S. Treasuries saw heavy selling this week after President Donald Trump escalated the trade war with China, lifting tariffs on Chinese imports on Wednesday to an effective rate of 145% and fuelling concerns that Beijing could raise its own duties. China did take that step on Friday, hiking its tariffs on U.S. imports to 125%.
The general domestic taxable fixed-income funds, short-to-intermediate investment-grade funds and loan participation funds saw a noticeable $6.93 billion, $6.66 billion and $6.51 billion worth of weekly net sales.
The U.S. short-to-intermediate government and Treasury funds, however, still received a massive $8.89 billion worth of inflows.
At the same time, investors poured $6.44 billion into U.S. equity funds, in a reversal from $10.83 billion worth of net sales a week ago.
TD Securities said in a note that as global sentiment soured and equity prices fell, low-cost index fund investors likely bought the dip, driven by a 'buy and forget' mindset and the belief that timing the market is nearly impossible.
Investors poured $17.71 billion into large-cap funds during the week, while pulling $1.9 billion and $1.43 billion from mid- and small-cap funds, respectively.
Sectoral funds saw $4.73 billion in net outflows, led by a sharp $2.05 billion withdrawal from financial sector funds — the biggest weekly outflow since April 2022.
U.S. money market funds, meanwhile, witnessed about $26.67 billion worth of outflows following two weekly inflows in a row.
