April 26, 2018 / 10:04 PM / 5 months ago

UPDATE 1-Investors shrug off rate fears, pour cash into equity funds

 (Adds quotes from head of research services at Thomson Reuters,
table)
    By Jennifer Ablan
    NEW YORK, April 26 (Reuters) - Investors were undeterred by
fears of rising interest rates, with U.S.-based equity funds
attracting $3.5 billion of net cash in the week ended April 25,
the third consecutive week of inflows, Lipper data showed on
Thursday.
    The inflows were boosted by strong earnings results and
solid economic news.
    U.S.-based taxable bond funds also attracted inflows, with
government-Treasury funds adding more than $1 billion for the
week ended Wednesday, according to Lipper data. Overall,
U.S.-based taxable bond funds posted $921 million for the week,
their seventh straight week of inflows, with U.S.-based
high-yield "junk" bond funds recording $2.5 billion in outflows.
    "I guess investors shrugged off the news about the benchmark
10-year Treasury yield closing above 3 percent for the first
time since December 27, 2013, and focused on the economics and
strong first-quarter earnings season so far," said Tom Roseen,
head of research services at Thomson Reuters Lipper.
    So far, 45 percent of S&P 500 companies have reported
first-quarter earnings, with 79.7 percent beating consensus
estimates. Analysts see 23.1 percent earnings growth for the
quarter, based on a blend of actual and estimated results. 
    But there could be a lag in terms of how investors will
respond to the 10-year yield, a benchmark for global borrowing
costs, crossing the critical 3 percent threshold, Roseen added. 
    
    "Although I am thinking that at least from a funds
perspective - excluding ETF (exchange-traded fund) flows - that
decision was made a week or two ago," Roseen said of the inflows
to bond and equity funds. "The average equity fund lost 2.42
percent for the flows week."
    Roseen said despite the flows into fixed-income funds,
investors appeared to be mildly concerned over inflation. 
    Lipper’s Inflation Protected Bond Funds classification
posted net inflows for the third consecutive week, while bank
loan funds took in money for the 10th consecutive week,
indicating some concern for rising rates. "So it wasn’t like
investors totally ignored the rising rates this week," he said,
noting inflation funds took in $112 million and bank loan funds
attracted $264 million. 
    Non-U.S. funds also found favor during the week. U.S.-based
emerging market equity funds attracted inflows of $975 million
for the week ended April 25, extending their weekly inflow
streak for all of 2018, Lipper data showed. Non-domestic equity
funds drew $3.75 billion of inflows, their fourth consecutive
week of new money, Lipper said. 
    The following is a breakdown of the flows for the week,
including mutual funds and ETFs: 
 Sector             Flow Chg      Assets    Assets       Count
                    ($ blns)      (pct)     ($ blns)     
 All Equity Funds   3.541         0.05      7,093.678    12,237
 Domestic Equities  -0.210        -0.00     4,843.738    8,709
 Non-Domestic       3.752         0.16      2,249.940    3,528
 Equities                                                
 All Taxable Bond   0.922         0.03      2,751.930    6,035
 Funds                                                   
 All Money Market   3.311         0.12      2,662.846    1,041
 Funds                                                   
 All Municipal      0.229         0.06      399.118      1,460
 Bond Funds                                              
 
 (Reporting by Jennifer Ablan; Editing by Lisa Shumaker and Dan
Grebler)
  
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