May 16, 2019 / 8:25 PM / a year ago

UPDATE 2-U.S.-based equity funds post $12.27 bln outflows amid U.S.-China trade tensions

 (Adds inflows into U.S.-based government-Treasury bond funds;
    By Jennifer Ablan
    May 16 (Reuters) - Investors rattled by lingering trade
tensions between the United States and China pulled $12.27
billion from U.S.-based equity funds in the week ended
Wednesday, according to data released by Refinitiv's Lipper
research service on Thursday.
    It was the category's fourth consecutive week of outflows,
Lipper data showed. Investors sought shelter from plummeting
equity markets earlier in the week and moved money into money
market and Treasury funds. 
    U.S.-based money market funds attracted $14.49 billion in
the week ended Wednesday, their fourth consecutive week of
inflows, Lipper said. U.S.-based government-Treasury bond funds
attracted $1.55 billion in the week ended Wednesday, Lipper
    On Monday, the S&P 500 suffered its steepest drop since
early January, after Beijing said it would raise tariffs on
American-made goods in retaliation for a similar move from the
United States. Stocks have since rebounded from that plunge but
there are signs that investors continue to worry about the costs
of the prolonged trade dispute.
    Pat Keon, senior research analyst at Lipper, noted that for
the second week in a row equity, equity exchange-traded funds
(ETFs) had net outflows right around $10 billion.
    "This represents the 2nd and 3rd highest of the year for the
group and highest since January 30 with investors withdrawing
about $14.6 billion," Keon said.
    For the last two weeks, the SPDR S&P 500 ETF has
accounted for over half of the total weekly net outflows for
equity ETFs, Keon said. 
    "This coupled with the large net inflows into money markets
over the last two weeks indicates to me that there is a lot of
uncertainty in the market, driven mainly by the U.S-China trade
tensions," he said.
    High-yield "junk" bond funds correlate more with equity than
they do with investment-grade taxable debt, Keon noted.
U.S.-based high-yield funds posted $2.57 billion in cash
withdrawals in the week ended Wednesday, their second straight
week of outflows.
    "Not surprising to see the large net outflows from them as
it aligns with market performance and the negative flows from
equity funds," Keon said. 
    "The high-yield results were the main reason that taxable
bond mutual funds suffered a weekly net outflow this week of
$263 million, which broke a streak of 17 straight weekly net
inflows," he added.
    The following is a broad breakdown of the flows for the
week, including mutual funds and exchange-traded funds:    
 Sector                  Flow Chg     %        Assets     Count
                         ($Bil)       Assets   ($Bil)     
 All Equity Funds        -12.271      -0.17    7,108.393  11,798
 Domestic Equities       -9.501       -0.19    5,074.720  8,386
 Non-Domestic Equities   -2.769       -0.13    2,033.673  3,412
 All Taxable Bond Funds  0.434        0.02     2,868.079  5,815
 All Money Market Funds  14.489       0.49     2,975.044  1,004
 All Municipal Bond      1.272        0.28     463.544    1,336
 (Reporting by Jennifer Ablan
Editing by James Dalgleish and Alistair Bell)
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