January 3, 2019 / 11:28 PM / 3 months ago

UPDATE 1-U.S. stock funds post record December withdrawals -estimate

 (Adds quote, table, details on funds, byline)
    By Trevor Hunnicutt
    NEW YORK, Jan 3 (Reuters) - Investors pulled $98 billion
from U.S.-based stock funds in December, a calendar-month record
that emphasizes the diminishing goodwill in financial markets,
preliminary Lipper estimates showed on Thursday.
    Fund investors trimmed their risk in the final days of 2018
to hunker down in case the Federal Reserve is too aggressively
tightening monetary policy ahead of an economic slowdown and as
the United States and China spar over trade. Some people see
recent equity declines as a buying opportunity and are
stockpiling cash to take advantage should prices fall further.
The S&P 500 fell 9 percent last month.
    "I used to feel comfortable saying we're not headed toward
an economic recession or an earnings recession - that means
we're in a correction, not a bear market," said Hugh Johnson,
chief investment officer of Hugh Johnson Advisors LLC in Albany,
New York. "It's getting harder and harder to do that, and with
the Apple news today it's getting even harder."
    Apple Inc warned on Wednesday about weak iPhone
demand in the holiday quarter due to slower sales in China,
foreshadowing similar problems for other companies in the coming
earnings season. The widely owned company's shares
fell nearly 10 percent on Thursday.
    December's withdrawals easily top the prior record, when
investors yanked $48.8 billion from U.S. stock funds as Congress
and then-President George W. Bush tried to stop banks failing in
October 2008. 
    Yet, while elevated, the monthly withdrawals amount to about
0.8 percent of the nearly $12 trillion of U.S.-based stock
mutual fund and exchange-traded fund (ETF) assets tracked by
Lipper, a research service. That data may be revised in coming
days as more fund companies report their results.
    During the most recent week, ended Jan. 2, investors pulled
$18.7 billion from stocks and $13.3 billion from bonds,
according to Lipper. Money market funds, where investors park
cash, attracted $6.1 billion for the week and $122 billion in
December, the preliminary numbers showed.
    In a break with most recent weeks, both mutual funds and
ETFs sold stocks at the same time during the latest seven-day
period. ETFs, used heavily by institutional investors, had
bought a net $9 billion in stocks in December. Mutual fund
investors have sold stocks for the last 28 weeks.
    The following is a breakdown of the flows for the week,
including mutual funds and ETFs:
 Sector                    Flow Chg  % Assets  Assets     Count
                           ($blns)             ($blns)    
 All Equity Funds          -18.738   -0.29     6,450.293  12,124
 -Domestic Equities        -13.516   -0.30     4,574.248  8,615
 -Non-Domestic Equities    -5.222    -0.28     1,876.046  3,509
 All Taxable Bond Funds    -12.702   -0.47     2,700.878  5,973
 All Money Market Funds    6.127     0.21      2,915.782  1,002
 All Municipal Bond Funds  -0.599    -0.14     428.195    1,445
 
 (Reporting by Trevor Hunnicutt
Additional reporting by Caroline Valetkevitch
Editing by Leslie Adler and Lisa Shumaker)
  
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