Feb 28 (Reuters) - Investors increased their holdings in

U.S. equity funds over the week to February 26, buoyed by

confidence in the economy's resilience and expectations of a

Federal Reserve rate cut later this year to stimulate growth.

Dismissing concerns over tariffs, investors acquired a net

$19.71 billion worth of U.S. equity funds during the week,

registering their largest weekly net purchase since December 25,

2024, according to data from LSEG Lipper.

"The U.S. economy is still in good shape, and we do not

think the announced tariffs will necessarily lead to a major

negative impact on growth," said Mark Haefele, chief investment

officer at UBS Global Wealth Management.

"But we believe market volatility will likely persist, and

the recent movement in bonds reaffirmed that quality fixed

income should remain an integral part of a resilient portfolio

that can help investors navigate uncertainty ahead."

U.S. large-cap funds experienced $20 billion in net

purchases, the highest in two months, with multi-cap funds

attracting $137 million. However, small-cap and mid-cap funds

saw outflows of $545 million and $197 million, respectively.

In U.S. sectoral funds, tech, healthcare and communication

services attracted $1.05 billion, $869 million and $518 million

respectively, while financial sector funds experienced

significant divestments of $1.2 billion.

This week, the S&P 500 and Nasdaq Composite

indexes dropped sharply by 2.5% and 5%, respectively, driven

down by a decline in Nvidia ( NVDA ) shares after the company's

quarterly report fell short of investor expectations.

Investors, meanwhile, channelled a $49.47 billion into money

market funds, which logged their largest weekly net purchase

since January 8.

At the same time, U.S. bond funds were in demand for the

eighth week in a row, with inflows totalling a net $7.42 billion

during the week.

By segment, U.S. short-to-intermediate investment-grade

funds, short-to-intermediate government and treasury funds, and

general domestic taxable fixed income funds led the way with a

net $1.82 billion, $1.56 billion and $1.37 billion, respectively

in inflows.