December 16, 2016 / 12:21 AM / a year ago

UPDATE 1-U.S.-based stock ETFs rake in cash as Fed raises rates -Lipper

(Adds data on mutual funds and ETFs, context, analyst quote,
table, byline)
    By Trevor Hunnicutt
    NEW YORK, Dec 15 (Reuters) - Investors piled into stock
exchange-traded funds at the fastest pace since their
record-setting haul following the U.S. presidential election,
Lipper said on Thursday, as policymakers raised interest rates.
    U.S.-based equity ETFs took in nearly $18 billion in cash in
the seven days through Wednesday, while U.S.-based stock mutual
funds posted cash withdrawals of $11 billion for the same
period, according to Lipper data. Mutual funds are seen to
represent retail investors' moves, while ETFs reflect a range of
investors, including institutions such as hedge funds.
    The new cash comes as stock markets have taken U.S.
President-elect Donald Trump's campaign promises to bulk up
government spending and trim regulations as cause for
    The Dow Jones industrial average has come within
striking distance of 20,000 for the first time. 
    "Stocks are considered to be a play against inflation," said
Tom Roseen, head of research services for Thomson Reuters
Lipper, noting that Trump's polices are hypothetical since he
does not take office until January. "The cart's ahead of the
    The $27 billion that moved into mostly index-tracking stock
ETFs after the Nov. 8 election was an all-time record, according
to Lipper data, even as actively managed stock mutual funds have
come under attack for weak performance and high fees.
    Taxable bond mutual funds and ETFs posted $5.8 billion in
outflows during the same weekly period, their largest
withdrawals since the U.S. presidential election, the data
    Rate-sensitive sectors were among the big winners and losers
of the week as the Federal Reserve hiked rates Wednesday for the
first time in a year. 
    Real-estate funds posted their largest weekly withdrawals
ever, $1.7 billion, according to Lipper records which date to
    High-yield bond funds took in $3.8 billion, their best
showing since July. The funds' hefty yields help cushion the
blow from rising rates, while rebounding oil prices have raised
hopes for indebted energy firms.
    European stock funds took in $66 million in only their
fourth week of inflows this year, and their first week in the
black since June. The euro dipped and bank stocks rallied after
the European Central Bank said it would slow its stimulus
program starting in April. 
    Healthcare sector funds posted $787 million in their largest
weekly withdrawals since March. Drug pricing has become a
political lightning rod, drawing the attention of Trump and the
U.S. Department of Justice, which on Wednesday filed
price-fixing charges against two former pharmaceutical
    The following table shows estimated ICI flows, including
ETFs (all figures in millions of dollars):
 Sector                    Flow Chg  % Assets  Assets     Count
                           ($blns)             ($blns)    
 All Equity Funds          6.849     0.13      5,447.713  11,838
 Domestic Equities         6.759     0.17      3,923.854  8,455
 Non-Domestic Equities     0.090     0.01      1,523.859  3,383
 All Taxable Bond Funds    -5.778    -0.25     2,304.446  5,982
 All Money Market Funds    -4.402    -0.19     2,373.379  1,019
 All Municipal Bond Funds  -1.990    -0.54     365.308    1,404
 (Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan)
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