November 3, 2017 / 1:06 AM / a year ago

UPDATE 1-U.S.-based stock funds take in most cash since May -Lipper

 (Adds data on mutual funds and ETFs, investor quote, table,
    By Trevor Hunnicutt
    NEW YORK, Nov 2 (Reuters) - Reluctant investors warmed to
stocks in October, stockpiling $19.3 billion in U.S.-based
equity funds, marking the first month of positive inflows for
the funds since May, when they took in $31.8 billion, Lipper
data showed on Thursday. 
    The massive inflows come as third-quarter earnings seem to
validate the strong market gains for stocks this year, with
earnings estimated to have risen 7.7 percent over the year
prior, according to Thomson Reuters I/B/E/S. The S&P 500
is up 17 percent this year, including dividends.
    For their part, money market funds, where investors park
cash, recorded withdrawals of $21.3 billion in the latest week
ended Wednesday, as investors put money to work in equities.
    Some investors still expressed concern that traders are
chasing lofty markets.
    But Garth Nisbet, a senior portfolio manager at Wells Fargo
& Co's asset management unit, said the economy is
thriving and that there is more upside to come.
    "There's two things that destroy wealth: market timing and
bearishness," he said, referring to market skeptics. "This is a
fairly market-friendly environment."
    U.S.-based stock mutual funds and exchange-traded funds
(ETFs) pulled in $3.6 billion during their fourth straight week
of inflows. Domestic stock fund inflows of $2.2 billion for the
week were the largest since August, according to Lipper.
    Nisbet said it is possible that technology stocks are due
for a pullback following "aggressive" gains, led by
Inc, and that rising U.S. wages may chip away at
corporate profits.
    Bond funds, popular for most of this year, saw their appeal
fade a bit. Taxable-bond funds took in their 17th straight week
of inflows, but just $678 million, down from the nearly $3
billion-a-week average this year.
    High-yield bond funds posted $1.2 billion in withdrawals,
the most since August this year. Treasury fund outflows of $887
million were the largest since August 2016.
    Among developed markets outside the United States, investors
favored Japan over Europe. Japanese stock inflows were the
largest since February at $501 million, while European equity
funds outflows of $404 million were the largest since September,
according to Thomson Reuters' Lipper unit.
    The following is a breakdown of the flows for the week,
including mutual funds and ETFs:
 Sector                    Flow Chg  % Assets  Assets     Count
                           ($blns)             ($blns)    
 All Equity Funds          3.598     0.06      6,296.851  12,127
 Domestic Equities         2.238     0.05      4,221.592  8,647
 Non-Domestic Equities     1.360     0.07      2,075.259  3,480
 All Taxable Bond Funds    0.678     0.03      2,599.764  6,052
 All Money Market Funds    -21.297   -0.82     2,571.202  1,056
 All Municipal Bond Funds  -0.655    -0.16     399.292    1,469
 (Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan)
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