Net assets of US equity funds fell by $2 trillion in the second quarter
(Reuters) – U.S. equity funds saw record erosion of net assets in the second quarter of this year as stocks tumbled on soaring inflation and growing expectations of rate hikes aggressive by the main central banks.
Data from Refinitiv Lipper showed net assets of U.S. equity funds fell $2.1 trillion to $9.2 trillion in the quarter ended June, the largest quarterly decline on record.
GRAPH: Net assets of US equity funds fell by more than $2 trillion in the second quarter https://graphics.Reuters.com/GLOBAL-MARKETS/gdvzylmnypw/chart.png
The declines were led by Vanguard Total Stock Market Index Fund; Inst+ and SPDR S&P 500 ETF Trust which lost $77.5 billion and $70.5 billion of their net assets respectively, while Vanguard 500 Index Fund; Admiral sold $69.3 billion.
GRAPH: Top 10 US equity funds that suffered the largest decline in net assets in the second quarter of 2022 – https://graphics.Reuters.com/GLOBAL-MARKETS/lgpdwzogovo/chart.png
The tech-heavy Nasdaq Composite and the broader S&P 500 Composite fell 22.4% and 16.45% respectively in the second quarter, marking their biggest January-June percentage decline since the financial crisis.
US equity mutual funds also saw an average decline of 15.3% in their net asset values between April and June this year.
The Federal Reserve has already raised interest rates three times this year and is expected to do another 75 basis points later this month.
These expectations of aggressive rate hikes have raised fears of a global recession, as companies are hit by higher borrowing costs and lower profit margins.
Goldman Sachs said in a note that a recession could cause the S&P 500 index to fall 19% to 3,150 by the end of 2022, and the price-earnings ratio to contract sharply.
“This peak-to-trough price decline of 34% would be slightly more severe than the historical average recessionary decline of 30%.”
Lipper’s weekly data showed U.S. equity funds saw outflows for the third straight week in the week ended July 13.
(Reporting by Patturaja Murugaboopathy; Editing by Vidya Ranganathan and)
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