Sept 19 (Reuters) - Investors withdrew massive capital

out of U.S. equity funds in the week to Sept. 17 as they turned

cautious about the market's lofty valuations following the

recent rally through a policy rate cut by the Federal Reserve

and rushed to lock in profits.

According to LSEG Lipper data, investors pulled out a net

$43.19 billion from U.S. equity funds in the week, logging their

largest weekly net sales since a $50.62 billion weekly outflow

in mid-December 2024.

The S&P 500 hit a record high of 6,656.8 on Thursday,

close to a 37.7% gain from nearly a 1-1/2 year low of 4,835.04

hit of April 7.

"The S&P 500 forward price-to-earnings ratio, at 22.6x, is

in the 99th percentile over the past 20 years," said Mark

Haefele, Chief Investment Officer at UBS Global Wealth

Management.

"After such a strong recent run, a period of consolidation

should not come as a surprise, in our view," UBS's Haefele said.

U.S. large-cap funds had a net $34.19 billion weekly

outflow, the biggest since at least 2020. Investors also shed

mid-cap funds of $1.58 billion but invested a marginal $50

million in small-cap funds.

Sectoral funds saw a net $1.24 billion outflow, the first

weekly net sales in four weeks as investors dumped technology

sector funds of a robust $2.84 billion.

U.S. bond funds, meanwhile, saw a 22nd successive weekly

inflow to the tune of $7.33 billion.

The short-to-intermediate investment-grade funds, general

domestic taxable fixed income funds and municipal debt funds

stood out with $1.59 billion, $1.14 billion and $1.04 billion,

respectively in weekly inflows.

Investors, meanwhile, ditched $23.65 billion worth of money

market funds, bringing a three-week trend of net purchases to an

end.