July 25, 2018 / 5:05 PM / 3 months ago

U.S. bond funds draw most cash in nearly 6 months -ICI

    By Trevor Hunnicutt
    NEW YORK, July 25 (Reuters) - U.S. fund investors pushed the
most cash in nearly 6 months into bonds in the latest week and
inched back into stocks for the first time in 5 weeks,
Investment Company Institute data showed on Wednesday.
    The data, collected over the seven-day period through July
18, shows investors tip-toeing into a market despite ongoing
concern over the U.S. conflict with its trading partners.
    During that week, Federal Reserve Chairman Jerome Powell
expressed an optimistic view on the U.S. economy and early
earnings reports mostly bolstered the outlook for the most
recent quarter.
    Bond mutual funds and exchange-traded funds based in the
United States collected nearly $8.7 billion during the week and
stock funds pulled in another $1.5 billion, according to the
trade group.
    The strong sales for debt funds were helped by nearly $1.8
billion pumped into municipal bond funds that offer tax-free
income, the most cash for those products since late January,
ICI's records show.
    Seen as a lower-risk source of income than equities, bond
funds have drawn strong demand despite the risk of rising
interest rates and inflation, not to mention the year-to-date
negative performance of many such debt funds.
    Bond ETFs, in particular, have also drawn interest from
institutions that traditionally favored trading individual
bonds.
    Nearly 87 percent of the cash that moved into stock funds
went into products primarily invested within the United States,
according to the ICI.
    After strong demand for stocks outside the country in 2017
and earlier this year, investors started pulling cash in recent
weeks as anxiety spiked about U.S. interest rate hikes as well
as the consequences of a growing trade war for the dollar and
equity markets around the world.    
    The following table shows estimated ICI flows for mutual
funds and ETFs (all figures in millions of dollars):
               7/18    7/11    7/3      6/27     6/20/2018
 Equity        1,492   -3,155  -10,614  -17,948  -5,173
    Domestic   1,297   -1,546  -11,376  -12,535  -3,880
    World      195     -1,609  762      -5,413   -1,293
 Hybrid        -1,829  -1,048  -2,552   -1,134   -857
 Bond          8,659   7,445   4,587    2,980    4,549
    Taxable    6,894   6,416   4,231    2,455    3,806
    Municipal  1,765   1,028   356      525      742
 Commodity     -308    101     -1,027   -612     -264
 Total         8,013   3,343   -9,606   -16,714  -1,745
    

 (Reporting by Trevor Hunnicutt; Editing by Dan Grebler)
  
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