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Index Performance

At the close of LSEG Lipper’s fund-flows week ending August 27, 2025, U.S. broad-based indices traded mixed: S&P 500 TR (+0.55%), Nasdaq (-0.19%), Russell 2000 (+0.19%), and DJIA (-0.2%).

Macro Viewpoint

July Personal Consumption Expenditures (PCE) Price Index data reaffirmed that inflationary pressures are flowing through the economy. Headline PCE rose 0.2% month over month and 2.6% year over year, while core PCE increased 0.3% and 2.9%, respectively, broadly in line with Reuters’ consensus. The data follows Chair Jerome Powell’s remarks at Jackson Hole, where he highlighted that higher tariffs are beginning to pass through to consumer prices, making the disinflation path more uneven. With inflation still running roughly 60 basis points (bps) above the Fed’s 2% target, attention now shifts to September as the markets are anxiously pricing in a rate cut.
 

Fund Flows by Asset Type
 

Flows across major asset classes were mixed over the week. Money market funds once again led the pack, pulling in $12.2 billion in net flows, underscoring continued demand for short-duration liquidity. U.S. taxable bond funds followed with $6.4 billion in inflows, while U.S. municipal bond funds also posted gains, attracting $590 million. U.S. equity funds registered a solid $2.2 billion in inflows, reflecting renewed risk appetite. On the other hand, mixed-assets funds saw $366 million in net outflows, while alternative investments posted $149 million in outflows.

Performance by Lipper U.S. Classifications
 

• Equity
   

Equity performance within the past week was concentrated in cyclicals and commodities, with Precious Metals Equity Funds (+6.06%), Equity Leverage (+4.54%), Basic Materials (+4.14%), and Natural Resources (+4.11%) driving gains. Small-Cap Value (+4.43%) also outperformed, reflecting renewed appetite for higher beta exposures. By contrast, international allocations lagged, with International Large Cap Value (-0.66%) and India Region (-1.96%) posting losses, while Consumer Goods (-1.21%) underperformed on the defensive side. The gain in commodities and value-oriented segments suggests that the market is pricing in a potential increase in inflation pressures.
 

• Fixed Income
   

Fixed income performance was broadly supported by credit, with Inflation-Protected Bonds (+0.86%), High Yield (+0.61%), GNMA (+0.58%), and Global High Yield (+0.46%) leading gains. By contrast, international exposures underperformed, with International Income (-0.01%) flat and Emerging Markets Hard Currency posting only a marginal gain (+0.07%). The tilt toward credit and inflation-linked securities highlights investor preference for spread products and hedges against sticky inflation.

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