April 27, 2017 / 10:17 PM / 7 months ago

UPDATE 2-International stock funds attract $1.8 bln post-French election

 (Adds hedge fund manager Dan Loeb's European position;
investment-grade and junk bond flows)
    By Sam Forgione and Jennifer Ablan
    NEW YORK, April 27 (Reuters) - Investors ramped up their
exposure to U.S.-based international-focused stock funds on
relief that centrist Emmanuel Macron took the first round of
voting in the French presidential election, reducing the
prospect of an anti-establishment market shock.
    International-focused stock funds attracted $1.8 billion in
the week ended April 26, compared with inflows of $1.3 billion
heading into the French election, according to data from Thomson
Reuters' Lipper service on Thursday. It was the group's sixth
straight week of inflows.
    "While markets had deemed a Marine Le Pen-Emmanuel Macron
run-off as the most likely outcome, there was an element of
uncertainty," said Tom Roseen, head of research services at
Thomson Reuters Lipper. "That uncertainty is gone and investors
feel more comfortable increasing their exposure to international
    For their part, U.S.-based European stock funds attracted
$720 million over the weekly period, their biggest inflows in
four weeks, Lipper data showed. U.S.-based European stock funds
posted inflows of just $108 million before the French election,
according to Lipper. 
    Roseen noted Germany's DAX was up a whopping 5.37 percent
during the reporting period of April 19 and April 26 "which
underscored the appetite for international and European funds.
There were really strong rallies everywhere."
    Hedge fund manager Daniel Loeb told investors on Thursday
that his $16 billion hedge fund Third Point saw more
opportunities in Europe. Third Point took a position in Italian
bank Unicredit Spa and a German utility, the firm said
in its first quarter letter. During the first three months of
the year, Third Point earned a 5.9 percent return.
    Overall, investors in U.S.-based funds poured $7.2 billion
into stock funds in the week ended Wednesday, marking the
biggest inflows in seven weeks, although all of the cash went
into exchange-traded funds over mutual funds. Stock ETFs
attracted $12.7 billion inflows over the weekly period, while
stock mutual funds posted outflows totaling $5.5 billion, Lipper
data showed. 
    Taxable bond funds attracted $6.3 billion to mark their
sixth straight week of inflows. U.S.-based corporate
investment-grade bond funds attracted $4.7 billion of inflows
over the weekly period, their biggest in five weeks, Lipper
    At the lower end of the quality curve, U.S.-based high-yield
junk bond funds posted inflows of $291 million over the weekly
period, their first inflows in three weeks, Lipper said.
    Roseen highlighted that the "risk-on trade" was underscored
by Wall Street's fear index, the so-called VIX, dropped 23
percent during the reporting period. 
    The following is a broad breakdown of the flows for the
week, including mutual funds and exchange-traded funds:  
 Sector         Flow Change    Pct of      Assets       Count
                  ($ blns)     Assets     ($ blns)     
 All Equity        7.158        0.13      5,870.780     11,589
 Domestic          6.204        0.15      4,144.569     8,292
 Non-Domestic      0.954        0.06      1,726.212     3,297
 All Taxable       6.318        0.26      2,397.283     5,841
 Bond Funds                                            
 All Money         10.410       0.45      2,306.368     1,022
 Market Funds                                          
 All Municipal     0.145        0.04       375.804      1,392
 Bond Funds                                            
 (Reporting by Sam Forgione and Jennifer Ablan; editing by
Bernard Orr and Grant McCool)

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