U.S. equity funds closed 2025 with robust inflows for a second consecutive week, reflecting investor optimism following a year of AI-driven stock market gains and strong expectations for corporate earnings growth in 2026.

Fund Flows and Market Performance

According to LSEG Lipper data, U.S. equity funds attracted approximately $16.89 billion in net inflows during the week ending December 31. This followed $18.3 billion of net investments the previous week, signaling sustained investor confidence as the year wrapped up.

The major stock indexes finished 2025 strongly:

• S&P 500: +16.39%
• Nasdaq Composite: +20.36%
• Dow Jones Industrial Average: +12.97%

All three indexes recorded gains for the third consecutive year, highlighting broad-based market strength.

Sector and Capitalization Trends

Investors showed a preference for large-cap equity funds, with net purchases of $16.87 billion, while pulling back slightly from small-cap (-$1.42 billion) and mid-cap (-$269 million) funds.

Sectoral equity funds experienced minor net outflows of $116 million, with healthcare and financials posting the largest sectoral withdrawals at $502 million and $290 million, respectively.

Bond and Money Market Activity

Fixed-income markets saw mixed flows as investors took some profits in bonds:

• U.S. bond funds: Net outflow of $2.09 billion, reversing a 12-week inflow streak.
• Short-to-intermediate government and treasury funds: -$5.43 billion, following a prior week’s $7.68 billion purchase.
• General domestic taxable and short-to-intermediate investment-grade funds: Inflows of $1.17 billion and $920 million, respectively.

Meanwhile, investors allocated $83.71 billion to money market funds, marking the largest weekly net purchase in four weeks as some market participants sought safer, liquid alternatives heading into 2026.

Corporate Earnings Outlook

Analysts covering 2,784 U.S. large- and mid-cap companies forecast earnings growth of approximately 15.13% in 2026, up from 12.92% in 2025, reflecting optimism that companies will continue to benefit from AI-driven efficiencies and ongoing economic growth.

Overall, the end-of-year fund flows signal that investors remain confident in the U.S. equity market, balancing strong AI-related gains with cautious positioning in bonds and money markets.