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UPDATE 1-U.S. stock fund flows decline week after one of biggest inflows of 2017
June 22, 2017 / 11:22 PM / 5 months ago

UPDATE 1-U.S. stock fund flows decline week after one of biggest inflows of 2017

 (Adds details on mutual funds and ETFs, analyst quote, table,
byline)
    By Trevor Hunnicutt
    NEW YORK, June 22 (Reuters) - Investors pulled back from
U.S.-based stock funds after pouring the most cash into those
investments since February the previous week, Lipper data showed
on Thursday.
    Withdrawals of $2.2 billion struck U.S.-based equity mutual
funds and exchange-traded funds during the week ended June 21,
the research service said, during a rollercoaster week for
stocks and as the Federal Reserve announced its second interest
rate hike of 2017.
    The S&P 500 recorded three down days and two up
during the measurement period, gaining just a tenth of a percent
overall, as oil prices dove, but healthcare and technology
stocks gained favor.
    In the previous week, U.S.-based stock funds managed to
attract $10.9 billion.
    Not coincidentally, investors turned to their all-time
favorite safe haven of bonds, placing $3 billion in U.S.-based,
taxable, fixed-income funds during the latest week, Lipper said.
    The debt funds attracted cash for the 14th straight week
even as the average fund in the category showed slightly
negative performance for the first time in six weeks, the data
showed.
    "There's some concern out there," said Pat Keon, senior
research analyst for Thomson Reuters' Lipper unit. "We're not
getting the inflation that everyone is expecting."
    A narrowing gap between the prices of long- and short-term
U.S. Treasuries showed the distance between the inflation
expectations of monetary policymakers and financial markets.
    The difference in yields between five-year notes and 30-year
bonds flattened to 96 basis points during the
week, the narrowest since December 2007. Investors normally
demand a premium for longer-term debt, in part because
quickening inflation erodes the bonds' value.
    Fed officials, by contrast, have called low inflation
readings "transitory."
    "The Fed is focused on a forecast of the near-term decline
in inflation prints being temporary," said Jeffrey Rosenberg,
BlackRock Inc's chief fixed-income strategist.
    "Market prices are not forecasting them being temporary."
    Investors also poured money into emerging markets as
U.S.-based emerging market equity funds attracted $143 million
over the weekly period, their sixth straight week of inflows.
    U.S.-based emerging market debt funds attracted $217 million
over the weekly, the group's 20th straight week of inflows,
Lipper added.
    
    The following is a breakdown of the flows for the week,
including mutual funds and exchange-traded funds:
 Sector                    Flow Chg   Pct of    Assets    Count
                           ($ blns)   Assets   ($ blns)   
 All Equity Funds           -2.183   -0.04     5,970.961  11,464
 Domestic Equities          -3.834   -0.09     4,163.997   8,216
 Non-Domestic Equities       1.651    0.09     1,806.963   3,248
 All Taxable Bond Funds      3.016    0.12     2,452.797   5,779
 All Money Market Funds    -20.692   -0.84     2,447.075   1,094
 All Municipal Bond Funds   -0.891   -0.23       387.470   1,393
 
 (Reporting by Trevor Hunnicutt; editing by Jennifer Ablan and G
Crosse)
  

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