GRAPHIC-U.S. equity funds see a surge in outflows in the week to June 9 -Lipper

June 11 (Reuters) – U.S. equity funds faced outflows for the second straight week in the week to June 9, despite a rally in equities, as caution crept ahead of a U.S. inflation report, whose outcome could determine the direction of the central bank’s monetary policy stance.

Investors sold a net $17.6 billion in U.S. equity funds in the week, the biggest in six weeks, Refinitiv Lipper data showed.

The selling was more severe in growth funds, which faced outflows of $8.7 billion, while value funds saw net sales of $4.2 billion.

Higher inflation and interest rates tend to undermine growth stocks more, as their future cash flows would be worth less when discounted with higher rates.

Data released on Thursday showed U.S. consumer prices rose solidly in May, leading to the biggest annual increase in 13 years.

However, some analysts believe the inflation data is still not enough to change the Federal Reserve’s view that rising consumer prices will be transitory or alter its monetary policy stance.

Among sector funds, consumer discretionary and tech sector funds faced outflows totaling $622 million and $444 million respectively.

On the other hand, investors purchased real estate sector fund worth $1.14 billion, the most in nine weeks, bolstered by rising house prices in the United States.

U.S. money market funds also faced outflows of a net $5.34 billion, after four straight weeks of net inflows.

Meanwhile, investors purchased a net $7.24 billion in U.S. bond funds, which was about 14% less than in the previous week.

U.S. taxable bond funds attracted a net $3.34 billion, while U.S. municipal bond funds obtained $452 million, both marking their smallest inflow in eight weeks.

Inflation-protected bonds were also in demand for the sixth straight week, which lured inflows of about $1 billion.

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