May 9, 2019 / 8:27 PM / a year ago

UPDATE 2-U.S.-based equity funds post $12.7 bln of cash withdrawals -Lipper

 (Adds flow data for investment-grade and money market funds,
    By Jennifer Ablan
    May 9 (Reuters) - The lingering U.S.-China trade war
deterred investors from stock markets as U.S.-based equity funds
posted over $12.7 billion of cash withdrawals in the week ended
May 8, their third consecutive week of outflows, according to
Refinitiv's Lipper research service data on Thursday.
    U.S.-based domestic equity funds, or funds based in the
United States which invest at least 75 percent of their assets
in domestic securities, posted more than $12.8 billion of
outflows, according to Lipper data, also their third straight
week of net cash withdrawals. 
    The risk-off mood spilled over to the lower-quality spectrum
of the U.S. credit markets with U.S.-based high-yield junk bond
funds posting $212 million of outflows in the week ended
Wednesday, Lipper said.
    "Equity funds with $12.7 billion of cash withdrawals
suffered their worst flows week since Jan. 30, 2019, with
minus$13.6 billion in outflows," said Pat Keon, senior research
analyst at Lipper. 
    "It was the third straight weekly net outflow for equity
funds, so they have been trending down. This result was more in
line with the week’s market losses - the Dow, S&P 500, and
NASDAQ were all down over 1% for the fund flows trading - than
past week’s," Keon said.
    Of note, the lion’s share of the net outflows came from just
two exchange-traded funds (ETFs), he said, noting the SPDR S&P
500 ETF and Invesco QQQ Trust, Keon said.
    The SPDR S&P 500 ETF posted $7.3 billion of cash withdrawals
and Invesco QQQ Trust posted $2.5 billion of outflows, Keon
    The net inflows into fixed-income funds - taxable bond funds
with over $1.8 billion and municipal-debt funds with $1.5
billion - "can possibly be seen as a combination of the
continuation of long-term trends as well as a safe haven play to
get away from the volatility of equities," Keon said.
    U.S.-based investment-grade corporate bond funds attracted
more than $3.3 billion in the week ended Wednesday, extending
their weekly inflow streak since late January, Lipper said.   
    Core Plus Bond Funds and Ultra Short Obligation Funds
carried the day for taxable bond funds, with inflows of more
than $1 billion and over $621 million, respectively. It was the
16th net inflow in 17 weeks for both of these peer groups, Keon
    For their part, U.S.-based money market funds attracted
about $22 billion of inflows in the week ended May 8, their
third consecutive week of net new cash, Lipper said.  
    "The net inflows into money markets could be investors
parking assets until the trade tension between the U.S. and
China and the volatility in the markets settles down," Keon
    The following is a broad breakdown of the flows for the
week, including mutual funds and exchange-traded funds:
 Sector                  Flow     %        Assets ($Bil)  Count
                         Chg      Assets                  
 All Equity Funds        -12.705  -0.17    7,194.726      11,794
 Domestic Equities       -12.806  -0.25    5,128.258      8,380
 Non-Domestic Equities   0.101    0.00     2,066.468      3,414
 All Taxable Bond Funds  1.830    0.06     2,865.493      5,821
 All Money Market Funds  21.985   0.75     2,960.355      1,004
 All Municipal Bond      1.502    0.33     460.801        1,336
 (Reporting by Jennifer Ablan; Editing by David Gregorio and
Susan Thomas)
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