US equity funds draw only subdued inflows on Fed independence risk

(Reuters) -U.S. equity funds drew only marginal inflows in the week through August 27 as risks to the Federal Reserve's independence kept investor demand in check after President Donald Trump attempted to fire a central bank governor.

Investors bought a net $571 million worth of U.S. equity funds during the week, although that was still a reversal from a net $2.39 billion outflow the prior week.

The S&P 500 and Dow Jones Industrial Average logged fresh record highs on Thursday, but U.S. domiciled equity funds have so far seen around a net $144 billion of outflows since the beginning of May.

In the most recent week, investors sold U.S. mid-cap and large-cap funds worth a net $1.96 billion and $459 million, respectively. Small-cap funds drew a net $762 million.

Sectoral funds also attracted a net $1.89 billion inflow, following the prior week's net $3.04 billion outflow, due to a $1.54 billion net purchase in the financial sector.

U.S. bond funds attracted net inflows for a 19th straight week, drawing a net $5.6 billion.

General domestic taxable fixed income funds gained a robust $2.75 billion, the largest net weekly inflow in eight weeks. Short-to-intermediate investment-grade funds saw $1.88 billion of net purchases.

Investors allocated a net $12.1 billion to money market funds, the third weekly net purchase in four weeks.

(Reporting by Gaurav Dogra in Bengaluru; Editing by Kirsten Donovan)

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