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U.S. fund investors cool on domestic stocks -ICI
November 8, 2017 / 5:45 PM / a month ago

U.S. fund investors cool on domestic stocks -ICI

    By Trevor Hunnicutt
    NEW YORK, Nov 8 (Reuters) - U.S. fund investors cooled on
domestic stocks during the latest week, pulling the most cash
from the market in four weeks, Investment Company Institute
(ICI) data showed on Wednesday.
    Domestic stock fund flows sank to negative $5.5 billion
during the week through Nov. 1, according to the trade group, as
demand for equity exchange-traded funds (ETFs) petered out after
two particularly strong weeks.
    Investors added $7.4 billion to taxable bond funds and $3.8
billion to world stock funds, with each category garnering a
48th consecutive week of net inflows, ICI said.
    The U.S. stock market has glided to new highs this year -
with the benchmark S&P 500 up 17.6 percent, including
dividends - but fund investors have remained cautious, favoring
bonds and international stocks.
    While fund investors have been lukewarm, managers are buying
domestic stocks. 
    Bank of America Corp's survey of fund managers
showed their cash balances falling to 4.7 percent, the lowest
since May 2015, while their U.S. stock holdings rose.
    "What's really driving markets at this point is momentum and
people buying because the pain of continuing to miss out is just
overwhelming," said Fritz Folts, chief investment strategist at
3EDGE Asset Management LP.
    Stockpickers and other fund managers eager to show off their
skills are piling into stocks that have already done well ahead
of making year-end disclosures to clients of what they own, he
    But Folts said bonds offer little respite from the stock
market's excesses because they are "insanely overvalued," with
the high-yield market in particular offering little value.
    "You're just not getting compensated for the risk that
you're taking," he said.
    The following table shows estimated ICI flows for mutual
funds and ETFs (all figures in millions of dollars):
                11/1   10/25   10/18   10/11     10/4
 Equity        -1,624  9,999   12,609  3,407    -3,461
    Domestic   -5,454  5,159   6,968   -1,623   -5,878
    World      3,830   4,840   5,641   5,030     2,417
 Hybrid         -985    -506    -724    -497    -1,295
 Bond          7,591   10,854  9,324   9,144    12,380
    Taxable    7,365   9,942   8,383   8,671    12,117
    Municipal   226     913     941     473       263
 Commodity      -242     98     -428    265      -357
 Total         4,740   20,445  20,781  12,319    7,267

 (Reporting by Trevor Hunnicutt, editing by G Crosse)

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