June 20, 2018 / 9:24 PM / a month ago

Investors poured $7.54 bln into equity ETFs after rocky G7 meeting -ICI

    By James Thorne
    NEW YORK, June 20 (Reuters) - Equity exchange-traded funds,
which draw a diverse set of clients including fast-trading hedge
funds, attracted $7.54 billion of net new cash in the week ended
June 13, according to Investment Company Institute data released
on Wednesday.
    After the divisive G7 summit in Quebec left stock indexes
relatively soft, equity ETF investors got a boost by the
"decent" meeting between U.S. President Donald Trump and North
Korean leader Kim Jong Un, said Bryan Hinmon, portfolio manager
of the Motley Fool Global Opportunities Fund.
    "Investors are able to use ETFs for more short-term
trading," Hinmon said. "The worst case scenarios seemed to be
off the table," said Hinmon, referring to the meeting between
Trump and Kim.
    Equity ETFs had estimated net issuance of $7.54 billion for
the week, compared to estimated negative net issuance of $1.06
billion in the previous week. Domestic equity ETFs had estimated
net issuance of $8.96 billion for the week ended June 13, ICI
    All told, equity demand in the ETF space overshadowed net
outflows in long-term mutual funds - which are heavily favored
by retail investors - of $772 million.
    Combined demand for bonds among ETFs and mutual funds
strengthened to $5.6 billion, slightly above the average for the
year. "I think what you're seeing is this sort of barbell
approach with a rebound in domestic equity flows but also
investors fleeing into bonds," Hinmon said.
    Fixed-income investors were not deterred by the U.S. Federal
Reserve, which raised interest rates as well as its tightening
guidance for 2018 on the final day of the ICI reporting period.

    Commodity funds posted a second straight week of outflows in
the period ending June 13 at $416 million. Hybrid funds, which
hold both stocks and fixed-income securities, were hit with
their 12th straight week of withdrawals at $2 billion.
    The following table shows estimated ICI flows for mutual
funds and ETFs (all figures in millions of dollars):
               6/13     6/6      5/30     5/23    5/16
 Equity        6,772    -3,651   5,435    3,994   8,394
    Domestic   7,814    -4,531   4,701    3,352   6,066
    World      -1,042   880      734      642     2,329
 Hybrid        -1,975   -1,118   -642     -807    -866
 Bond          5,564    1,375    2,235    5,206   5,177
    Taxable    5,238    726      1,574    5,021   4,727
    Municipal  326      648      661      185     450
 Commodity     -416     -761     125      -73     -281
 Total         9,944    -4,156   7,153    8,320   12,425
 (Reporting by James Thorne
Editing by Tom Brown)
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