September 21, 2018 / 12:11 AM / a month ago

Ultra-short obligation funds attract inflows ahead of Fed -Lipper

    By Jennifer Ablan
    NEW YORK, Sept 20 (Reuters) - Investors took on a defensive
approach ahead of next week's Federal Reserve meeting, pouring
money into ultra-short obligation funds as well as equity and
fixed-income exchange-traded funds, Lipper data showed on
Thursday. 
    The ultra-short obligation funds (USO) peer group, which are
used to offset interest rate risk, had net inflows of $614
million in the week ended Wednesday, their 28th straight week of
net inflows, said Patrick Keon, senior analyst at Thomson
Reuters Lipper.
    The market views as a near certainty that the Fed will hike
interest rates by 25 basis points when it meets on Tuesday and
Wednesday next week, based on fed fund futures.
    Exchange-traded funds - beloved for the ease and speed with
which they can be bought and sold - took in more than $4.2
billion, marking the 11th time in 12 weeks that they took in new
net new money. Taxable bond ETFs, which attracted $2.2 billion,
and equity ETFs, which attracted  $2 billion, were responsible
for the overwhelming majority of the net inflows, while muni
debt ETFs contributed $36 million to the total intake, Lipper
said. 
    The SPDR Bloomberg Barclays High Yield Bond ETF,
which nabbed over $700 million, and the iShares 20+ Year
Treasury Bond ETF, which attracted over $256 million,
had the largest individual net inflows on the taxable bond side
of the ledger. The SPDR S&P 500 ETF posted the largest
inflows for equity ETFs with more than $2.7 billion in net new
cash, according to Lipper.
    In comparison, mutual funds have suffered net outflows in
seven of the last 12 weeks. Equity mutual funds posted outflows
of more than $1 billion in the week ended Wednesday, marking the
group's 13th consecutive week of net outflows, Lipper said.
Domestic equity funds were responsible for all the net outflows,
with investors pulling more than $1.3 billion, while nondomestic
equity funds took in $257 million of net new money, Lipper said.
    The largest net outflows among domestic equity funds
belonged to the large-cap core funds peer group at $499 million,
while global equity income funds had the largest net inflows for
non-domestic equity funds at $589 million.    
    Overall, money market funds drove the overall net outflows
for the week, with more than $19.5 billion of cash withdrawals,
"but we’ve come to expect this level of movement from this asset
group," Keon said. "This is evidenced by the fact that the money
market peer group has had eight weeks this year in which the net
flows were over $20 billion - which includes both net inflows
and net outflows."
    The following is a breakdown of the flows for the week,
including mutual funds and ETFs: 
 Sector                 Flow     % Assets  Assets ($Bil)  Count
                        Chg                               
                        ($Bil)                            
 All Equity Funds       0.998    0.01      7,575.445      12,242
 Domestic Equities      1.411    0.03      5,414.698      8,694
 Non-Domestic Equities  -0.413   -0.02     2,160.747      3,548
 All Taxable Bond       3.256    0.12      2,820.568      6,054
 Funds                                                    
 All Money Market       -19.487  -0.71     2,730.840      1,034
 Funds                                                    
 All Municipal Bond     0.141    0.03      428.139        1,461
 Funds                                                    
 
 (Reporting by Jennifer Ablan
Editing by Leslie Adler)
  
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