With the Federal Reserve’s policy announcement approaching, U.S. investors sharply repositioned their portfolios—moving decisively toward safer assets and stepping back from equities during the week ending December 3.
According to LSEG Lipper data, investors poured an impressive $104.75 billion into U.S. money market funds, marking the largest weekly inflow since November 5. Despite expectations of a potential rate cut, caution dominated the market, particularly as valuations among mega-cap tech names remain stretched.
This defensive stance led to a net withdrawal of $3.52 billion from U.S. equity funds—extending the trend of net selling for a second consecutive week.
- Mid-cap funds posted their seventh straight outflow, losing $494.92 million.
- Small-cap funds saw withdrawals of $1.18 billion, while
- Large-cap funds recorded outflows of $476 million.
Interestingly, sector-specific equity funds continued to draw investor interest, accumulating $510 million in net inflows for the second week in a row.
- Industrials funds led with $510 million in inflows.
- Gold & precious metals funds followed with $293 million, reflecting ongoing demand for hedging instruments.
On the fixed-income side, U.S. bond funds attracted a modest $314 million—their smallest weekly gain since October 1.
- Short-to-intermediate investment-grade funds saw inflows of $1.45 billion,
- Municipal debt funds gained $737 million,
- While short-to-intermediate government & treasury funds experienced a notable outflow of $1.58 billion.
As markets brace for the Fed’s next move, investor sentiment continues to tilt toward capital preservation and selective sector opportunities.