February 28, 2019 / 11:49 PM / 22 days ago

UPDATE 1-Investors favor equity ETFs, junk bonds as risk appetite grows -Lipper

 (Adds quotes from senior research analyst at Lipper, byline)
    By Jennifer Ablan
    Feb 28 (Reuters) - Investors poured money into equity
exchange-traded funds and high-yield "junk" bond funds in the
week ended on Wednesday, as U.S. President Donald Trump said he
would extend a deadline to delay escalating tariffs on Chinese
imports, citing "substantial progress" in talks between the two
countries.
    U.S.-based high-yield bond funds attracted $698 million,
marking the sector's fifth straight week of inflows, according
to data from Refinitiv's Lipper research service. U.S.-based
equity ETFs attracted about $7.5 billion in the latest week,
Lipper noted.
    Investors' risk appetite grew in the wake of "some positive"
news about U.S.-China trade talks earlier in the week, said Pat
Keon, senior research analyst at Lipper. He also cited the U.S.
Federal Reserve's statements that the central bank would be
patient in hiking interest rate and that it would soon stop
reducing its balance sheet.
    "It was a good week overall, net inflows just shy of $16
billion with all four asset groups - money markets, taxable bond
funds, muni bond funds, and equity funds - taking in net new
money," Keon said.
    Taxable bond funds posted $4.3 billion in inflows, the
largest outside of money market funds.
    "It was the taxable bond funds group's seventh straight
weekly net inflow," he said. "Ultra-short obligation funds (USO)
drove the overall positive net flows for the group as they took
in $1.47 billion. This is the continuation of a long-term trend
as USO funds have had net inflows in 50 of the last 51 weeks for
a total intake of over $69 billion."
    Equity ETFs, which attracted $7.5 billion, were responsible
for all of the net inflows as equity mutual funds saw $5.1
billion leave, Keon noted.
    "This was the second straight net outflow for equity mutual
funds after six straight net inflows," he said. "The net
outflows for equity mutual funds were across the board as the
majority of peer groups saw money leave, both for domestic and
nondomestic funds."
    The two largest net inflows for individual ETFs belong to
broad market U.S. equity products as SPDR S&P 500 ETF
and iShares Core S&P Total U.S. Stock Market ETF took
in $2 billion and $1.1 billion, respectively, Keon pointed out.
    The following is a breakdown of the flows for the week,
including mutual funds and ETFs:
    
 Sector             Flow Change    Pct of  Assets         Count
                    ($ blns)       Assets  ($ blns)       
 All Equity Funds   2.335          0.03    7,236.856      12,146
 Domestic Equities  3.691          0.07    5,147.169      8,624
 Non-Domestic       -1.355         -0.07   2,089.687      3,522
 Equities                                                 
 All Taxable Bond   4.319          0.15    2,817.583      5,982
 Funds                                                    
 All Money Market   7.558          0.26    2,949.344      1,007
 Funds                                                    
 All Municipal      1.705          0.39    442.770        1,409
 Bond Funds                                               
 
 (Reporting by Jennifer Ablan; Editing by Jonathan Oatis and
Richard Chang)
  
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