December 20, 2018 / 11:05 PM / a month ago

UPDATE 2-U.S. stock funds set for record monthly withdrawals -Lipper

 (Adds investor quote, market context)
    By Trevor Hunnicutt
    NEW YORK, Dec 20 (Reuters) - Investors fled U.S.-based stock
funds in the latest week, setting those investments up for their
biggest month of withdrawals on record, Lipper data showed on
Thursday.
    More than $80.7 billion poured out of U.S.-based stock funds
during the 14 days through Dec. 19, representing about 1 percent
of the total assets in such funds, according to the research
service.
    The selling continued during a week in which the U.S.
Federal Reserve raised rates for the ninth time in about three
years and reaffirmed its commitment to tightening monetary
policy even as markets prepare for a slowdown in economic
growth. U.S. stocks slid again on Thursday, with the Nasdaq
Composite on the cusp of confirming it is in bear market
territory.
    If the withdrawals continue for the eight final trading days
of the year, December will mark the biggest cash-out from U.S.
equity funds on records that date to 1992, when the fund
industry was far smaller.
    "The central bankers are taking the punchbowl away and it's
not being well received," said Stephen Blumenthal, executive
chairman of CMG Capital Management Group Inc, an investment
manager. "If we were having all these troubles and the market
was ridiculously cheap it wouldn't be as big of a problem."
    With the recent market declines, the S&P 500's forward
price-to-earnings ratio is now at 15.3, its lowest level since
early 2016 but above its 15 longer-term average, according to
data from Refinitiv.
    Stock mutual funds heavily used by retail investors were
responsible for the withdrawals during the latest week, with
nearly $41 billion pouring out. Equity ETFs used more broadly,
including by fast-trading institutions, attracted $6.4 billion.
    Individual investors are the most pessimistic about stock
performance they have been in more than five years, with 49
percent expecting the market to fall in the next six months,
according to a survey by the American Association of Individual
Investors.
    The end-of-year fund sales numbers could also reflect
changes related to capital gains distributions and as investors
re-evaluate their holdings for tax reasons and other purposes,
though in other years the volume has not been this high.
    The following is a breakdown of the flows for the week,
including mutual funds and ETFs:
    
 Sector                    Flows     Pct of    Assets     Count
                           Change    Assets    ($ blns)   
                           ($ blns)                       
 All Equity Funds          -34.556   -0.51     6,456.118  12,119
 -Domestic Equities        -25.339   -0.52     4,566.777  8,606
 -Non-Domestic Equities    -9.217    -0.47     1,889.340  3,513
 All Taxable Bond Funds    -10.380   -0.38     2,718.731  5,975
 All Money Market Funds    1.725     0.06      2,872.333  1,004
 All Municipal Bond Funds  0.255     0.06      425.519    1,413
 
 (Reporting by Trevor Hunnicutt
Editing by Dan Grebler, Jennifer Ablan and Tom Brown)
  
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