Net assets of US equity funds fell by $2 trillion in the second quarter


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.

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 the value of their net assets 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 send the S&P 500 index down 19% to 3,150 by the end of 2022, and a sharp contraction in the price-earnings ratio.

“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.


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