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Jan 2 (Reuters) – U.S. equity funds drew strong inflows for a second straight week in the week to December 31 as investors cheered solid annual gains from an AI-driven rally and ended the year on an optimistic note over the outlook for corporate earnings.
According to LSEG Lipper data, U.S. equity funds attracted approximately $16.89 billion worth of inflows during the week, adding to the $18.3 billion weekly net investments in the previous week.
The S&P 500 (^GSPC) gained 16.39% last year, the Nasdaq rose 20.36%, and the Dow Jones Industrial Average climbed 12.97% as these indexes finished in the green for a third consecutive year.
LSEG data covering 2,784 U.S. large- and mid-cap companies show analysts expect earnings to grow about 15.13% in 2026, up 2.21 percentage points from the 12.92% growth forecast for 2025.
Investors bought a net $16.87 billion worth of large-cap equity funds in the most recent week, after approximately $37.4 billion worth of net purchases in the prior week.
They, however, divested small-cap funds of $1.42 billion and mid-cap funds of $269 million.
Sectoral funds also witnessed a marginal $116 million worth of weekly net sales, with healthcare and financials facing outflows to the tune of $502 million and $290 million, respectively.
Investors, meanwhile, withdrew $2.09 billion from U.S. bond funds following 12 weeks of net investments in a row.
They pulled out $5.43 billion from U.S. short-to-intermediate government and treasury funds, broadly reversing a massive $7.68 billion net purchase a week ago.
General domestic taxable fixed-income funds and short-to-intermediate investment-grade funds, however, witnessed inflows of $1.17 billion and $920 million, respectively.
Investors allocated a hefty $83.71 billion to the safety of money market funds as they logged the largest weekly net purchase in four weeks.
(Reporting by Gaurav DograEditing by Gareth Jones)