US equity fund outflows extend to second week as Iran war sours sentiment.

U.S. equity funds ⁠were ⁠under selling pressure for ⁠a second straight week through March 11 as ​Iranian attacks on Middle East energy infrastructure and oil tankers ‌increased the risk of ‌economic stagflation.

Investors divested a net $7.77 billion worth of U.S. ⁠equity ⁠funds during the week, adding to approximately $21.91 billion worth ​of net sales in the prior week, data from LSEG Lipper showed.

U.S. crude prices soared 9.7% on Thursday, taking month-to-date gains ​to about 42.88% as global oil markets grappled with what ⁠traders ⁠described as the largest ⁠oil ​supply disruption in history, with shipping in the Gulf and the ​narrow Strait of ⁠Hormuz coming close to a standstill.

The equity large-cap, mid-cap and small-cap fund segments recorded net outflows of $20.98 billion, $405 million and $8 million, respectively, while the multi-cap sector saw a ⁠net $9.32 billion weekly inflow.

Investors ditched $4.48 billion worth of growth funds ⁠but snapped up value funds for a fifth successive week, to the tune of $2.91 billion.

Bond funds remained popular for a 10th successive week, attracting roughly $8.21 billion in net inflows.

Short-to-intermediate government and treasury funds saw roughly $4.05 billion in net inflows, the biggest amount for a week since December 24. Short-to-intermediate investment-grade funds and ⁠municipal debt funds also attracted net purchases of $2.77 billion and $614 million, respectively.

U.S. money market funds gained approximately $1.5 billion in net inflows, as investors extended the recent ​buying streak for a fourth week.

Flows of money into ⁠emerging ⁠market bond funds fell in the week ⁠to March 11, while those into emerging market equity funds flattened after five straight weeks of ​inflows, shaken by the war in Iran, analysts said on Friday.

Investors are fleeing assets perceived as riskier due to the uncertainty caused by the ‌conflict and surging oil prices, even though ‌some say the strong fundamentals of many emerging economies could help shield them from the fallout.

“EM credit had been remarkably resilient to the ⁠AI disruption-driven gyrations ⁠in broader risk markets in February,” Barclays head of EM credit research Andreas Kolbe wrote ​in a note.

“But recent events in the Middle East, and the associated spike in energy prices, have quickly shifted the narrative from a “goldilocks”-type environment to stagflation.”

He was referring to ideal conditions for emerging market assets due to the weaker U.S. dollar, years of post-COVID-19 policy reforms and solid central bank ​policymaking. Stagflation - low growth and high inflation - could derail that.

Morgan Stanley analysts said outflows from global-mandated emerging market ⁠debt ⁠funds reached $1.1 billion in the past ⁠week, based on data ​from EPFR, compared with inflows of $3.2 billion in the prior week.

The weekly outflows were the first such drawdown from emerging ​fixed income since early January.

Matt Vogel, ⁠head of emerging markets strategy with Marex, said the figures show roughly $21 billion had poured into hard and local currency emerging market debt in total during the first couple of months of the year - a record amount for the timeframe and almost two thirds of the $35 billion that flowed in during the whole of 2025.

Vogel said that while the record amount of EM sovereign and corporate debt issued so far this ⁠year had absorbed a large chunk of that, there is still cash available should the situation in ⁠the Middle East improve.