In the week ending August 6, 2025, U.S. investors withdrew a substantial $13.7 billion from equity funds, marking the largest weekly outflow since June 25. This shift was driven by concerns over new trade tariffs imposed by President Donald Trump and weak economic indicators.
A significant $78.85 billion flowed into money market funds, the highest since December 2024, reflecting a flight to safety. Small-cap equity funds experienced the steepest withdrawals at $5.2 billion, while large-cap and mid-cap funds recorded $7 billion and $1.71 billion in net sales, respectively.
Despite the overall equity outflows, sectoral funds saw $806 million in inflows, led by communication services and industrials. Bond funds also experienced strong demand, with weekly net investments reaching an 11-week high of $7.39 billion. Notably, investment-grade, government, treasury, and municipal debt funds drew $3.22 billion, $2.43 billion, and $1.66 billion, respectively.
UBS Global Wealth Management's Chief Investment Officer, Mark Haefele, noted that while near-term volatility may persist, long-term plans should remain intact. He stated, "Our base case remains that the U.S. effective tariff rate will settle at around 15%—enough to weigh on growth and lift inflation, but not enough to derail the U.S. economy or … ."
These developments underscore the market's sensitivity to trade policies and economic indicators, highlighting the importance of strategic investment decisions during periods of uncertainty.