March 28, 2018 / 5:33 PM / 7 months ago

Turnabout for U.S. stock fund demand over fair trade rift

    By Trevor Hunnicutt
    NEW YORK, March 28 (Reuters) - U.S. fund investors reversed
course, skimming $17 billion off domestic stock funds during the
most recent week, data from the Investment Company Institute
(ICI) showed on Wednesday.
    The withdrawals, during the week ended March 21, came as the
prospect of a trade clash between the United States and China
shook investors, and just one week after U.S.-based domestic
equity funds took in $19 billion, the most cash in nine months.
    President Donald Trump's move to impose tariffs on up to $60
billion of Chinese imports drove fears about the impact on the
global economy. Stocks have continued selling off in the days
since.
    "I'm seriously worried the market could give back even
more," said Linda Zhang, chief executive of Purview Investments
LLC. "The trade rhetoric is very, very troubling."
    Markets have been whipsawed in a give-and-take this year
marked by shifts from excitement over signs of economic growth
to hand-wringing over higher inflation, yields and the prospect
that the technology giants will be more heavily regulated. Just
earlier this month, tech funds took in the most money since the
year 2000's mania. 
    U.S. mutual and exchange-traded fund (ETF) investors
retained their taste for international stocks, with world equity
funds raking in $3.3 billion in a streak of weekly inflows
unbroken in more than a year, according to the ICI, a trade
group.
    Bond funds, meanwhile, attracted $5.3 billion. Commodity
funds, including those that invest directly in safe-haven gold,
pulled in $938 million, the most cash in six weeks, ICI said.
    In addition to the fast-money equity trading, the March 15
to March 21 fund data were influenced by unusual trading
patterns as investors unwound positions in futures and options
contracts that expired simultaneously, a phenomenon known as
"quadruple-witching."
    The following table shows estimated ICI flows for mutual
funds and ETFs (all figures in million of dollars):
               3/21     3/14    3/7      2/28    2/21/2018
 Equity        -13,790  25,220  -6,453   11,703  2,505
    Domestic   -17,122  19,080  -10,974  6,397   -4,899
    World      3,331    6,139   4,521    5,306   7,405
 Hybrid        151      -611    -500     -422    -965
 Bond          5,303    8,441   1,533    5,177   4,452
    Taxable    4,534    7,738   1,319    5,067   3,970
    Municipal  769      703     214      110     481
 Commodity     938      30      210      278     477
 Total         -7,399   33,079  -5,210   16,736  6,469
 
 (Reporting by Trevor Hunnicutt; Editing by Cynthia Osterman)
  
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