September 22, 2017 / 12:00 AM / a year ago

UPDATE 1-U.S. bond funds, tech stocks attract huge inflows -Lipper

 (Adds details on mutual funds and ETFs, analyst quote, table,
    By Trevor Hunnicutt
    NEW YORK, Sept 21 (Reuters) - U.S.-based taxable-bond funds
took in $7 billion during the latest week, the largest weekly
intake since July, adding to an already strong year for debt
against the backdrop of a rate-hiking cycle, Lipper data showed
on Thursday.
    Even in a week with big inflows for technology stocks, U.S.
fund investors continue to favor debt over equity. The Federal
Reserve on Wednesday announced plans to reduce its own bond
holdings, marking a historic shift from the ultra-easy monetary
policy it had adopted since the 2007-2009 global financial
    Taxable-bond mutual funds and exchange-traded funds (ETFs)
have now brought in nearly $219 billion this year in the United
States, according to Thomson Reuters' Lipper research unit.
    But that is not a bubble, said Matthew Forester, chief
investment officer for Lockwood Advisors Inc., part of the Bank
of New York Mellon Corp.
    "Market prices should already reflect Fed decisions," said
Forester. "Debt, demographics and technology-driven disinflation
all work to suppress long-term rates."
    Bond prices rise as rates fall.
    Financial sector funds, which are seen profiting from higher
rates, also pulled in their largest week of inflows since July,
at $530 million. Real estate sector funds, by contrast, posted
$407 million in outflows during the week ended Sept. 20, their
largest withdrawals since June.
    U.S.-based stock funds pulled in $803 million, according to
    U.S.-based technology sector stock funds pulled in $1.1
billion, their largest week of inflows since September 2006.
    The VanEck Vectors Semiconductor ETF attracted $420
million during the week, the third most on record for the ETF.
    The iShares North American Tech-Software ETF pulled
in $176 million, while the Technology Select Sector SPDR Fund
 gathered $138 million.
    Nvidia Corp shares hit a record high this month as
analysts noted the semiconductor firm's progress in artificial
    However, they took a bit of a hit on Thursday on reports
that Tesla Inc was working with Advanced Micro Devices
Inc to develop a chip for self-driving cars. One of
AMD's chipmaking partners later denied that report.
    Apple Inc, the biggest holding in the broad tech
sector ETF, last week rolled out its iPhone X, a glass and
stainless steel device with an edge-to-edge display, along with
a smartwatch. However, mixed reviews for the new watch weighed
on the company's shares.
    The following is a breakdown of the flows for the week,
including mutual funds and ETFs:
 Sector                    Flow Chg  % Assets  Assets     Count
                           ($blns)             ($blns)    
 All Equity Funds          0.803     0.01      6,377.758  12,153
 Domestic Equities         -2.012    -0.05     4,352.292  8,652
 Non-Domestic Equities     2.815     0.14      2,025.466  3,501
 All Taxable Bond Funds    7.040     0.28      2,560.635  6,092
 All Money Market Funds    -18.249   -0.71     2,547.409  1,075
 All Municipal Bond Funds  0.574     0.14      398.571    1,473
 (Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and
Rosalba O'Brien)
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