June 7, 2018 / 11:12 PM / in 4 months

UPDATE 1-U.S. money market funds see biggest inflows in nearly 5 years -Lipper

 (Adds details on funds, analyst quote, table, byline)
    By Trevor Hunnicutt
    NEW YORK, June 7 (Reuters) - Investors flooded U.S.-based
money market funds with the most cash in nearly five years in
the latest week, seizing an opportunity to reap richer yields
while taking less risk, Lipper data showed on Thursday.
    The funds, where investors park cash, pulled in nearly $34.9
billion during the seven days through June 6, according to the
research service.
    Trade tensions, euro-zone strife and an unwind in emerging
markets threaten to shake a near-decade of relatively ideal
market conditions and profitable bets.
    "People are really quite concerned with China. I think they
became very concerned when the United States decided to put
tariffs on their largest trading partners," said Tom Roseen,
head of research services for Thomson Reuters' Lipper unit.
"Some people are taking their foot off the pedal even though we
had phenomenal returns."
    The U.S. Federal Reserve's interest rates hikes have helped
money market funds, which invest in relatively safe short-term
corporate and municipal debt. Money fund yields averaged 1.41
percent at the end of May, up from just 0.49 percent a year ago,
according to Crane Data LLC, an industry resource.
    Money market funds were shunned in recent years, with
clients spooked by declines during the 2008 global financial
crisis and by changes to how the funds were regulated in the
years since.
    The Fed pushed rates lower in response to the crisis, and
the rock-bottom yields sent clients to riskier investment
options with higher returns.
    Money funds could be competing for cash with other
safe-haven assets. Precious metals commodity funds, for
instance, posted $1.1 billion in withdrawals over the most
recent seven days, their largest week of outflows since November
2016, Lipper said.
    
    EMERGING MARKET SHOCKWAVE
    U.S.-based stock funds invested in emerging markets gathered
just $4.8 million during the week, only a week after the largest
withdrawals in more than 18 months, while their debt
counterparts posted $521 million in outflows, the most since
February.
    The Lipper data does not include flows during an emerging
markets selloff on Thursday, when Brazilian stocks tanked.
Emerging markets face threats from rising U.S. interest rates
and oil price volatility as well as trade tensions and a
stronger U.S. dollar that makes debt denominated in the currency
more expensive to repay.
    But investors were more optimistic about market-leading
technology stocks in the United States. Sector funds focused on
tech pulled in $1.2 billion, the most since March, according to
Lipper.
    The following is a breakdown of the flows for the week,
including mutual funds and ETFs:
 Sector                    Flow Chg  % Assets  Assets     Count
                           ($blns)             ($blns)    
 All Equity Funds          -4.255    -0.06     7,562.586  12,300
 Domestic Equities         -2.872    -0.06     5,260.504  8,754
 Non-Domestic Equities     -1.383    -0.06     2,302.083  3,546
 All Taxable Bond Funds    -1.192    -0.04     2,783.656  6,074
 All Money Market Funds    34.898    1.29      2,744.965  1,041
 All Municipal Bond Funds  0.189     0.04      429.733    1,458
 
 (Reporting by Trevor Hunnicutt; Editing by Lisa Shumaker and
Leslie Adler)
  
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