July 11, 2019 / 8:44 PM / 9 days ago

UPDATE 2-Investors pour $28 bln in money-market funds as S&P 500 hit record high -Lipper

 (Adds analyst comment, table)
    By Jennifer Ablan
    July 11 (Reuters) - U.S.-based money-market funds attracted
about $28 billion in the week ended Wednesday, their largest
weekly inflow since mid-May, as the S&P 500 Index rose
above 3,000 for the first time on Wednesday.
    It was money funds' third consecutive week of cash inflows,
with a four-week moving average of $18.8 billion, according to
data by Refinitiv's Lipper. 
    The move in safe, conservative money-market funds is notable
as the S&P 500 Index and the Dow Jones Industrial Average rose
above 3,000 and over 27,000 for the first time, respectively,
this week.  
    Earlier this year, BlackRock Chief Executive Larry Fink
pointed out that mom-and-pop investors were under-invested in
equity markets and that the group could put money to work in
U.S. stocks if markets continue to rise. "We have a risk of a
melt-up, not a meltdown here," Fink said at the time. 
    From an economic standpoint, the net inflows into money
market funds over the last three weeks could be seen as
"investors putting money on the sidelines," said Pat Keon,
senior research analyst at Lipper. 
    "Money is taken out of play like this, particularly in
stocks, during times of uncertainty," he said. "Federal Reserve
chairman Jerome Powell has pointed to the current uncertainty
multiple times in the recent past with respect to the U.S.-China
trade war, global growth concerns and the still tepid inflation
data."
    For the week ended Wednesday, U.S.-based equity funds -
which include both mutual funds and exchange-traded funds -
attracted just $1 billion in the week, following three weeks of
cash withdrawals.
    Keon said this week's inflows stem from "the strength of
equity ETFs (Exchange-Traded Funds) with plus-$4.3 billion of
inflows, while equity mutual funds saw negative $3.3 billion
leave their coffers - the group’s 21st consecutive week of net
outflows." 
    The flows into equity ETFs were concentrated in one product,
the SPDR S&P 500 ETF, which took in over $3.7 billion,
Keon said. 
    "Domestic equity mutual funds were responsible for the
lion’s share of the net outflows at negative $2.6 billion," he
said. "This is the continuation of a long-term trend as the
group has had 22 straight weeks of net outflows for a total of
-$87.1 billion."
    U.S.-based leveraged loan funds posted cash withdrawals of
$332 million, extending their weekly outflow streak since
November 2018. 
    "Loan funds have floating rates. So, a rising interest-rate
environment is good for them, therefore the Fed’s actions have
hurt this classification while helping the fixed-rate investment
grade classifications," Keon said. 
    The following is a broad breakdown of the flows for the
week, including mutual funds and exchange-traded funds:
 Sector              Flow Chg      % Assets  Assets     Count
                     ($Bil)                  ($Bil)     
 All Equity Funds    1.031         0.01      7,368.745  11,782
 Domestic Equities   1.753         0.03      5,279.100  8,388
 Non-Domestic        -0.722        -0.03     2,089.645  3,394
 Equities                                               
 All Taxable Bond    2.109         0.07      2,964.296  5,836
 Funds                                                  
 All Money Market    27.898        0.90      3,125.234  1,006
 Funds                                                  
 All Municipal Bond  1.009         0.21      477.347    1,342
 Funds                                                  
 
 (Reporting by Jennifer Ablan
Editing by Susan Thomas and Bill Berkrot)
  
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