February 15, 2017 / 8:21 PM / in 5 months

U.S. stock fund investors turning away from 'America First'

4 Min Read

By Trevor Hunnicutt
    NEW YORK, Feb 15 (Reuters) - U.S. investors are favoring
international stocks over domestic ones, in a shift away from
the trend that followed Donald Trump's presidential victory,
Investment Company Institute data released on Wednesday show.
    U.S.-based equity funds invested internationally attracted
$4.7 billion during the latest week, the most in a year, while
funds that buy shares of companies in the United States gathered
just $814 million, according to the trade group's data.    
    Foreign stock funds have absorbed more cash than their
domestic counterparts in seven of the last eight weeks, the data
show.
    "I think you're seeing some better opportunities
internationally," said Jim Jasinski, managing principal at Cape
Ann Capital Inc, a wealth management company in Manchester,
Massachusetts. "The U.S. markets have been on such an incredible
run."
    During President Trump's inauguration last month, he
declared "from this day forward it's going to be only America
First," and stocks responded in kind. He has touted a stew of
tax cuts, domestic infrastructure spending, regulation cuts and
recasting trade deals to boost U.S. jobs and economic growth.
    Investors spent the five weeks after his election buying
U.S.-based domestic stock funds. World stock funds lagged
behind, taking in just $4.2 billion over that period, $50.2
billion less than their domestic counterparts, ICI said.
    MSCI's benchmark global equity index, which
includes the United States, hovered near record territory on
Wednesday. 
    That obscures the fact that U.S. stocks have done far
better. The S&P 500 index, a measure of U.S. stocks, has
gained 9.5 percent in terms of price since the election, while a
comparable MSCI gauge of 45 other countries 
gained just 5.1 percent. That may mean the foreign stocks are a
relative bargain.
    "Whether people like the new administration or not there's a
prevailing feeling that it will be a pro-business
administration," said Jasinski. "That's tending to prop that
market up a bit more and rich valuations might be getting even
richer."
    The relative safety of bonds and gold also drew interest
from investors during the week through Feb. 8. Commodity funds,
including those invested in gold, attracted $1.1 billion, their
most since July 2016.
    Bond funds gathered $11.6 billion during the week, the most
in more than a year. 
    The following table shows estimated ICI flows, including
mutual funds and exchange-traded funds (all figures in millions
of dollars):
                2/8     2/1    1/25    1/18  1/11/2017
 Equity       5,492  15,045  -3,933  -1,292      7,431
 -Domestic      814  11,769  -8,249  -3,748      3,001
 -World       4,678   3,276   4,315   2,457      4,430
 Hybrid         155    -567    -549    -106       -899
 Bond        11,615   9,388   8,158   4,655      9,608
 -Taxable    10,705   8,511   7,637   3,531      7,755
 -Municipal     911     877     521   1,124      1,853
 Commodity    1,061     413    -492     231       -283
 Total       18,323  24,279   3,185   3,488     15,856
 
 (Reporting by Trevor Hunnicutt; Editing by Richard Chang)

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