February 22, 2018 / 11:44 PM / a year ago

UPDATE 1-U.S. fund investors creep back in to market -Lipper

 (Adds details on funds, analyst comment, table)
    By Trevor Hunnicutt
    NEW YORK, Feb 22 (Reuters) - U.S. fund investors inched back
in to the markets during the most recent week, putting $2.5
billion into bonds and $1.1 billion into stocks, Lipper data
showed on Thursday.
    Yet wounded investors were reluctant to wade back in to
their home market, with domestic equity funds recording a third
straight week of withdrawals, despite a rebound from a quick
selloff at the beginning of the month.
    Nearly $4.6 billion cascaded out of those products in the
seven days through Feb. 21, Lipper said. Cash-like money market
funds gathered $12.3 billion during the week.
    "The markets are still a little jittery about interest
rates," said Pat Keon, senior research analyst for Thomson
Reuters' Lipper unit. "They're worried that the Fed might get
more aggressive."
    On Wednesday, minutes of the Jan. 30-31 meeting cemented
expectations that the Fed will hike rates under its new chief
Jerome Powell next month, and that rates will be hiked on at
least another two occasions in 2018.
    The yield on the benchmark 10-year Treasury note
leapt from around 2 percent in September to just shy of 3
percent this month as economic growth and low unemployment gave
rise to concerns the U.S. Federal Reserve may have to raise
rates quickly to head off inflationary pressures.
    The S&P 500 fell more than 10 percent in a few weeks
around the beginning of this month before rebounding a bit in
recent days.
    U.S. fund investors withdrew the most cash on record from
equity funds two weeks ago, but are cherry-picking opportunities
to get back in. Nondomestic stock funds took in $5.7 billion
this week, according to Lipper, offsetting the domestic stock
    Emerging markets' stocks, a big winner despite the U.S.
selloff, pulled in nearly $2 billion, a ninth straight week of
inflows for funds focused on those markets, the research service
    Last week, risk-off sentiment spread to bonds, with
high-yield "junk" bond funds posting their second-biggest cash
withdrawals on record, $6.3 billion. The result improved this
week, with outflows totaling just $335 million, Lipper said.
    The following is a breakdown of the flows for the week,
including mutual funds and ETFs:
          Sector           Flow Chg   Pct of    Assets   Count
                           ($ blns)   Assets   ($ blns)  
 All Equity Funds             1.128      0.02  6,887.87  12,166
 -Domestic Equities          -4.567      -0.1  4,664.05   8,667
 -Non-Domestic Equities       5.696      0.26  2,223.82   3,499
 All Taxable Bond Funds       2.198      0.08  2,632.92   6,075
 All Money Market Funds      12.277      0.45  2,711.25   1,039
 All Municipal Bond Funds     0.347      0.09    401.24   1,476
 (Reporting by Trevor Hunnicutt; Editing by Chris Reese and
Matthew Lewis)
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