July 18, 2019 / 8:53 PM / 7 months ago

UPDATE 1-U.S.-based equity ETFs attract $8.8 bln as bull market roars on

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By Jennifer Ablan

July 18 (Reuters) - Investors took advantage of soaring stock markets, putting $8.8 billion to work in U.S.-based equity exchange-traded funds in the week ended Wednesday, according to Refinitiv’s Lipper data on Thursday.

During the reporting period, the S&P 500 closed above the 3,000 level for the first time, against the backdrop of equity-friendly comments from Federal Reserve Chairman Jerome Powell.

Last week in his two-day testimony before Congress, Powell said the U.S. economy was still under threat from disappointing factory activity, tame inflation and a simmering trade war and that the central bank stood ready to “act as appropriate.”

Tom Roseen, head of research services at Lipper, said ETF investors were net purchasers of both taxable bond ETFs - more than $1.7 billion - and equity ETFs with more than $8.8 billion.

“”While ETF investors put money to work in the latest week, retail investors turned a cold shoulder to equity funds, withdrawing more than $5.1 billion,” he said.

It was the 22nd consecutive week that conventional equity funds posted net redemptions, Roseen said.

Roseen said one “continuous bright spot” was in the municipal bond market. Investors added to municipal bond funds for the 28th straight week with more than $1.4 billion, bringing their year-to-date total to $47.6 billion, he said.

That beats all one-year totals going back to 2010, Roseen noted.

U.S.-based leveraged loan funds have been struggling since Powell’s recent dovish comments and hints at an imminent rate cut. They posted their 35th consecutive week of outflows.

Year to date, they have seen some $21.595 billion in net redemptions, the most since 2014, Roseen said. (Reporting by Jennifer AblanEditing by Leslie Adler; Editing by Cynthia Osterman)

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