February 8, 2017 / 7:09 PM / 6 months ago

U.S.-based funds net most cash in more than 3 years -ICI

By Trevor Hunnicutt
    NEW YORK, Feb 8 (Reuters) - Investors poured cash into
U.S.-based mutual funds and exchange-traded funds at the fastest
pace since 2013 during the latest week, Investment Company
Institute data showed on Wednesday, funneling $24.3 billion into
the market.
    That figure is the largest since Oct 23, 2013, and comes as
investors showed a strong desire for all kinds of financial
assets, from stocks to bonds and gold, just a few weeks into the
term of a new U.S. president and Congress with an unformed
policy agenda.
    The week ended Feb. 1 is the first time since August that
U.S. and international stock, bond and commodity funds all
netted money in the same week, according to the ICI, a trade
group.
    "Investors have become more invested in the stock and bond
market using funds, moving some money off the sidelines," said
Todd Rosenbluth, director of ETF and mutual fund research at
CFRA.
    With fourth-quarter earnings reports in focus, stock funds
took in $15 billion, the largest since Dec. 14, including $11.8
billion into funds that buy domestic shares, ICI data showed.
    Nearly seven-in-ten S&P 500 companies beat Wall
Street analyst's profit forecasts, according to Thomson Reuters
I/B/E/S. About two-thirds of the index has reported results.
    But after a strong rally since November, investors are
extending their bet on growth to companies outside the United
States. Funds invested in international shares gathered $3.3
billion, their ninth straight week of inflows, ICI said.
    U.S. President Donald Trump, who took office last month, and
his Republican party have touted potential new economic stimulus
measures, such as tax cuts and infrastructure spending. That
initially sparked a stock rally and selloff of government-bond
and gold funds.
    The selloff proved short-lived. During the latest week,
taxable bond funds took in $8.5 billion, the largest haul since
July 13, 2016 and their ninth straight week of inflows.
    Paul Kim, managing director for ETF Strategy at asset
management company Principal Global Investors, said
investors are not prepared for the risk that long-dated bonds
could be hurt as the Federal Reserve raises rates.    
    "There's a ton of duration risk that the market is not
properly positioned for," said Kim.
    Commodity funds, which include those invested in gold,
reversed outflows from the week prior, gathering $413 million,
ICI. The figure is their best sales result since the November
presidential election week and came before gold hit a
three-month peak on Wednesday. 
    The following table shows estimated ICI flows, including
mutual funds and exchange-traded funds (all figures in millions
of dollars):
                2/1    1/25    1/18    1/11  1/4/2017
 Equity      15,045  -3,933  -1,292   7,431    -1,603
 -Domestic   11,769  -8,249  -3,748   3,001    -2,087
 -World       3,276   4,315   2,457   4,430       484
 Hybrid        -567    -549    -106    -899    -1,941
 Bond         9,393   8,158   4,655   9,608     2,360
 -Taxable     8,515   7,637   3,531   7,755     3,950
 -Municipal     878     521   1,124   1,853    -1,590
 Commodity      413    -492     231    -283      -500
 Total       24,284   3,185   3,488  15,856    -1,683
    

 (Reporting by Trevor Hunnicutt; editing by Diane Craft)

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