March 22, 2018 / 11:11 PM / 9 months ago

UPDATE 1-Investors pull $9.6 bln from U.S. equity funds, deepening selloff

    * U.S. fund investors pull nearly $10 bln from stocks
    * 'Junk' bond, bank outflows largest in five weeks
    * Utilities, real estate funds get respite from rate hike
fears

 (Adds details on funds, quote, table, byline)
    By Trevor Hunnicutt
    NEW YORK, March 22 (Reuters) - U.S. fund investors stripped
billions from stocks during the most recent week, Lipper data
showed on Thursday, adding to the selling pressure building on
markets.
    More than $9.6 billion cascaded out of U.S.-based equity
funds during the week ended March 21, the Thomson Reuters
research service said, just one week after those products took
in $20 billion, illustrating the unstable mood gripping
investors.
    Stocks slumped on Thursday as President Donald Trump's move
to impose tariffs on up to $60 billion of Chinese imports drove
fears about the impact on the global economy and fueled the
biggest percentage declines in Wall Street's three major indexes
since they entered correction territory six weeks ago.
    Markets have been whipsawed in a give-and-take this year
marked by shifts from excitement over signs of economic growth
to hand-wringing over higher inflation and yields. Just a week
ago, Lipper reported that technology sector stock funds took in
the most cash since the mania of the year 2000.  
    The market "goes up on good economic news, it goes down on
higher rate news," said Jim Paulsen, chief investment strategist
at the Leuthold Group LLC.  "It's going nowhere fast."
    In the most recent week, it was negative developments that
seemed to gain traction with investors. 
    Domestic stock funds posted $13 billion in withdrawals,
offset a bit by continued demand for shares outside the country,
but still the largest outflows since the first seven days of
February when market conditions worsened.
    The most recent week's flows were also influenced by unusual
trading patterns as investors unwound positions in futures and
options contracts that expired on Friday, a phenomenon known as
"quadruple-witching."
    Volatility is nonetheless perking up activity in
exchange-traded funds (ETFs). Nearly 2.5 trillion euros in ETFs
changed hands globally in February ($3 trillion), according to
Flow Traders NV, the most on records dating to 2015.
    
    RISING RATES
    High-yield "junk" bond funds and financial sector funds
posted their largest withdrawals in five weeks during the latest
period, while precious metals commodities funds collected their
fifth straight week of inflows.
    Stock sectors sensitive to rising rates got a respite as the
U.S. Federal Reserve signaled just two more rate hikes in 2018.

    Utilities funds took in $311 million, the most since June
2017, while real estate sector products pulled in $196 million,
the most cash since January.
    Overall, bond funds took in $3.2 billion during the week,
Lipper data showed.
    The following is a breakdown of the flows for the week,
including mutual funds and ETFs:
 Sector                    Flow Chg  Pct of    Assets     Count
                           ($ blns)  Assets    ($ blns)   
 All Equity Funds          -9.641    -0.14     6,997.132  12,191
 Domestic Equities         -13.006   -0.27     4,715.982  8,662
 Non-Domestic Equities     3.365     0.15      2,281.150  3,529
 All Taxable Bond Funds    2.765     0.10      2,710.804  6,078
 All Money Market Funds    -0.305    -0.01     2,675.265  1,040
 All Municipal Bond Funds  0.445     0.11      402.214    1,475
 
 (Reporting by Trevor Hunnicutt, additional reporting by Sinead
Carew; editing by Jennifer Ablan and Cynthia Osterman)
  
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