NEW YORK — U.S. equity funds pulled in about $16.89 billion in net new cash in the week ended Dec. 31, closing 2025 with a second straight weekly inflow, according to LSEG Lipper data reported by Reuters. The buying skewed heavily toward large-cap products after a strong year for U.S. stocks, while bond funds slipped into outflows and money market funds drew fresh cash, Jan. 2, 2026.
In the latest week, large-cap equity funds attracted $16.87 billion, while investors pulled $1.42 billion from small-cap funds and $269 million from mid-cap funds. Sector funds posted a modest $116 million in net sales, led by outflows from healthcare ($502 million) and financials ($290 million).
Flows tracked in LSEG’s Lipper fund database arrived after a year when major benchmarks ended higher for a third consecutive year, reinforcing risk appetite that has been shaped by the market’s AI-fueled leadership and a stronger earnings outlook for 2026.
U.S. equity funds lean on large caps as 2026 begins
The concentration in large caps underscores how U.S. equity funds are being used to express conviction in the biggest names, even as investors stay cautious on smaller companies. Large-cap inflows in the prior week were far higher, suggesting some year-end rebalancing and tax-related positioning, but U.S. equity funds still finished the year with a clear preference for scale and liquidity.
LSEG earnings estimates cited in the data show analysts expecting profit growth for large- and mid-cap U.S. firms to accelerate in 2026. If those expectations hold, U.S. equity funds could keep drawing money early in the year, though gains may be more uneven if leadership narrows or volatility returns.
Bond funds retreat as cash piles up
Bond funds saw $2.09 billion in net outflows, snapping a 12-week run of inflows. The largest retreat came from short-to-intermediate government and Treasury funds, which lost $5.43 billion, while general domestic taxable fixed-income funds took in $1.17 billion and short-to-intermediate investment-grade funds added $920 million.
Cash demand was also visible in money market products: investors put $83.71 billion into money market funds in the week, and the Investment Company Institute’s weekly money market fund assets report showed total money market assets at $7.73 trillion as of Dec. 30.
That mix of stock inflows and bond outflows has shown up before around year-end. In late December 2024, U.S. equity funds took in $20.56 billion after a sharp prior-week selloff, according to a Reuters review of Lipper flows. In December 2023, investors were more defensive, pulling billions from both growth and value products, Reuters reported in a separate fund-flows snapshot.
Looking ahead, the durability of the rally may depend on earnings delivery and the path for interest rates. Traders will be watching rate expectations via the CME FedWatch Tool as they gauge whether 2026 brings easier financial conditions that could broaden demand beyond large caps—and keep U.S. equity funds in positive territory.
