July 25, 2019 / 8:55 PM / 5 months ago

UPDATE 2-Investors book profits from U.S.-based equity funds ahead of Fed meeting

 (Adds taxable, municipal debt flows; table)
    By Jennifer Ablan
    July 25 (Reuters) - U.S.-based equity funds posted more than
$8.4 billion of cash withdrawals in the week ended Wednesday,
following two weeks of inflows, according to Refinitiv's Lipper.
    The withdrawals came ahead of next week's Federal Reserve
meeting. In the same week, U.S.-based money-market funds
attracted $26 billion, their fifth consecutive week of inflows,
Lipper said. 
    The Federal Reserve is widely expected to cut interest rates
next week to bolster the U.S. economy, even as the U.S.
unemployment rate sits at its lowest in 50 years. Broad
expectations that the Fed would cut rates to counter the impact
of a protracted trade war have helped Wall Street's main indexes
scale record levels this month. 
    "Despite plus-side equity returns, both fund investors and
ETF investors were net redeemers of equity assets, redeeming a
net $8.4 billion for the week," said Tom Roseen, head of
research services at Lipper. 
    "Shrugging off progress in the U.S.-China trade talks, a
nice start to the Q2 earnings season, and general agreement on
the U.S. budget and ceiling, investors showed constraint after
learning that Iran had seized a British oil tanker in the Strait
of Hormuz, increasing geopolitical concerns."
    Roseen said investors moved money from equities to bonds.
"Both fund and ETF investors padded the coffers of taxable and
tax-exempt bond funds, investing net new money in longer-dated
issues," he said.  
    U.S.-based municipal bond funds attracted $1.96 billion of
net new cash, the group's largest weekly net inflows on record
going back to 1992, Lipper said. U.S.-based investment-grade
corporate bond funds attracted about $2.5 billion in the week
ended Wednesday, their eighth consecutive week of inflows,
according to Lipper data. At the lower-end of the credit-quality
spectrum, U.S.-based high-yield junk bond funds attracted more
than $1.3 billion in the week ended Wednesday, their seventh
straight week of inflows, Lipper said.  
    For the fifth week running, investors were net purchasers of
money market funds, injecting $26 billion into this safe-haven
asset class, Roseen added.
    The following is a broad breakdown of the flows for the
week, including mutual funds and exchange-traded funds:
 Sector                 Flow Chg  % Assets   Assets      Count
                        ($Bil)               ($Bil)      
 All Equity Funds       -8.401    -0.11      7,443.523   11,781
 Domestic Equities      -7.194    -0.14      5,336.367   8,378
 Non-Domestic Equities  -1.207    -0.06      2,107.156   3,403
 All Taxable Bond       3.957     0.13       2,982.566   5,818
 All Money Market       26.049    0.83       3,160.673   1,008
 All Municipal Bond     1.957     0.41       482.093     1,342
 (Reporting by Jennifer Ablan; editing by Susan Thomas and Lisa
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