January 11, 2018 / 10:49 PM / 12 days ago

UPDATE 1-U.S.-based equity funds attract $12 bln of new cash in latest week -Lipper

 (Adds analyst quotes, table)
    By Jennifer Ablan
    NEW YORK, Jan 11 (Reuters) - Investors' appetite for risk
was on display this week as U.S.-based equity mutual funds
attracted $1.45 billion of net inflows, their third straight
week of inflows, and U.S.-based equity exchange-traded funds
attracted $10.6 billion, according to Lipper data on Thursday. 
    Moving in sympathy with equities, U.S.-based high-yield junk
bond funds attracted $2.65 billion in the week ended Wednesday,
their second straight week of inflows. And U.S.-based
investment-grade corporate bond funds attracted $4.16 billion in
the week ended Wednesday, extending their weekly inflow streak
since September, Lipper said.
    Major indexes have hit a series of record highs since the
start of the year and the S&P 500 is up 3.5 percent since Dec.
31.   
    "Obviously a strong week for funds, inflows just about
across the board," said Pat Keon, senior research analyst at
Thomson Reuters Lipper. 
    "Some of the optimism from the markets seems to have
trickled down to fund flows this week. The inflows into high
yield funds, equity funds as well as both emerging market equity
and debt funds can all be viewed as risk-on strategies."
    U.S.-based emerging market debt funds attracted $1.5 billion
of new cash in the week ended Wednesday, their eighth straight
week of inflows, Lipper said. U.S.-based emerging market equity
funds posted inflows of $3.85 billion in the week ended
Wednesday, their third consecutive week of net new cash, Lipper
said.
    Keon said doubts about the aggressiveness of rate hikes by
the Federal Reserve this year might be enticing investors to add
exposure into fixed-income funds.  
    "Investment grade corporate bond funds are coming off a
strong year, but I think the group benefited from uncertainty
from the Fed about the three projected interest rate hikes for
2018," he said. 
    "The Federal Open Market Committee minutes - which were
released last week - indicated that the Fed was divided about
the three forecasted increases for 2018." 
    One camp believed that three more rate increases was too
aggressive and might prevent inflation from reaching and
sustaining the Fed’s target rate, he said. 
    The other side theorized that the three rate hikes were not
enough, since the Fed’s rate-hike program had not yet caused
financial conditions to deteriorate and that leaving interest
rates at an artificially low level would increase the risk of
financial instability, he said.
    Investors yanked $2.2 billion from money market funds, their
second straight week of cash outflows, Lipper said. 
    The following is a breakdown of the flows for the latest
week, through Jan. 10, including mutual funds and ETFs:   
 Sector              Flow Chg     %        Assets ($Bil)  Count
                     ($Bil)       Assets                  
 All Equity Funds    12.040       0.18     6,950.430      12,140
 Domestic Equities   2.061        0.04     4,745.249      8,654
 Non-Domestic        9.979        0.46     2,205.182      3,486
 Equities                                                 
 All Taxable Bond    10.445       0.40     2,644.865      6,065
 Funds                                                    
 All Money Market    -2.193       -0.08    2,673.176      1,031
 Funds                                                    
 All Municipal Bond  1.065        0.26     402.092        1,477
 Funds                                                    
 
 (Reporting By Jennifer Ablan; editing by Diane Craft and Susan
Thomas)
  
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