In the money: Nvidia’s $100B OpenAI bet sparks $12B equity fund surge

U.S. equity funds attracted $12.06 billion in net inflows during the week ending September 24, reversing two consecutive weeks of outflows as investor sentiment improved following Nvidia’s announcement of a potential $100 billion investment in OpenAI. The renewed appetite for equities signals growing confidence in AI-driven market opportunities, with large-cap funds leading the charge while bond funds also experienced their strongest weekly performance since February 2021.

What you should know: The equity fund turnaround represents a dramatic shift from the previous week’s massive $39.91 billion outflow.

• Large-cap equity funds dominated the inflows with $16.94 billion in net investments, marking the largest weekly addition since April 9.
• Mid-cap and small-cap funds bucked the trend, posting outflows of $1.64 billion and $71 million respectively.
• The reversal coincided with Nvidia’s announcement regarding its potential massive investment in OpenAI, the artificial intelligence company behind ChatGPT, boosting risk appetite among investors.

Bond market momentum: Fixed-income funds experienced their strongest performance in nearly four years, drawing $11.9 billion in weekly investments.

• Short-to-intermediate government and treasury funds captured the lion’s share with $8.02 billion in net inflows.
• General domestic taxable fixed income funds attracted $1.78 billion, while short-to-intermediate investment-grade funds received $1.69 billion.
• The bond surge represents the highest weekly inflow since February 2021, indicating broad-based investor confidence.

Sector specifics: Industrial sector funds led sectoral investments despite modest overall sectoral fund performance.

• Sectoral funds overall added just $407 million in net investments for the week.
• The industrial sector specifically attracted $1.11 billion in net inflows, likely benefiting from AI infrastructure optimism.
• Money market funds continued their strong performance, attracting $26.71 billion in the fourth weekly net investment over five weeks.

The big picture: The simultaneous strength in both equity and bond markets suggests investors are positioning for potential AI-driven economic growth while maintaining defensive allocations, creating a balanced approach to portfolio management amid technological uncertainty.