December 6, 2017 / 5:10 PM / a year ago

U.S. taxable bond funds bring in cash for 52 straight weeks -ICI

    By Trevor Hunnicutt
    NEW YORK, Dec 6 (Reuters) - U.S. taxable bond funds likely
marked a full year without a single week of withdrawals,
Investment Company Institute (ICI) data showed on Wednesday, as
cash glided into debt markets in search of both safety and
better returns.
    The mutual funds and exchange-traded funds (ETFs) pulled in
$6.4 billion during the week ended Nov. 29, a 52nd consecutive
week of inflows, according to the trade group.
    Flows into debt products came even as U.S. lawmakers
appeared closer to passing a tax bill that could cut corporate
rates, a prospect that has helped ignite further stock gains.
The S&P 500 has gained 2.7 percent since Nov. 15,
including dividends.
    Fund investors scarred by the 2007-2009 global financial
crisis have been skeptical despite stocks rising for the better
part of a decade, keeping extra money in cash and bonds. U.S.
bond funds have taken in more than $2 for every $1 gathered by
their equity counterparts this year, according to data from
Thomson Reuters' Lipper research unit.    
    The taxable bond fund category includes U.S.-based funds
that invest in low risk and low-yield government debt, such as
Treasuries, as well as higher yielding but riskier bonds issued
by companies.
    "They recognize they have a lot of equity risk in their
portfolios," said Alex Healy, deputy chief investment officer of
AlphaSimplex Group LLC. "We can't get used to equity markets
going up and up and up."
    The risk is that investors build too much of a stake in
interest rate-sensitive bonds.
    "It's one thing to be buying bonds when rates are at
all-time highs," Healy said. "It's another thing to be buying
when rates are at lows."
    Funds focused on stocks outside the United States also
marked their 52nd consecutive week of inflows, taking in $3.8
billion during the week, according to the ICI.
    But demand for domestic stock funds ebbed, with those
products posting outflows of $645 million, compared with inflows
of $1.2 billion the week before, ICI said.
    The following table shows estimated ICI flows for mutual
funds and ETFs (all figures in million of dollars):
               11/29  11/21   11/15   11/8    11/1/2017
 Equity        3,129  5,026   -54     2,851   -1,624
    Domestic   -645   1,166   -4,214  -3,660  -5,454
    World      3,775  3,860   4,160   6,511   3,830
 Hybrid        -652   -500    -359    -373    -999
 Bond          6,538  6,900   1,468   5,401   7,460
    Taxable    6,369  6,162   839     4,499   7,234
    Municipal  169    737     630     903     226
 Commodity     -295   -39     136     -153    -242
 Total         8,720  11,386  1,191   7,727   4,595
 (Reporting by Trevor Hunnicutt; Editing by Susan Thomas)
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