December 19, 2018 / 9:54 PM / 6 months ago

U.S. fund investors withdraw most cash in three years -ICI

    By Trevor Hunnicutt
    NEW YORK, Dec 19 (Reuters) - U.S. fund investors stripped
the most cash from U.S.-based mutual funds in more than three
years in the latest week, Investment Company Institute (ICI)
data showed on Wednesday, as concern mounted about interest
rates and economic growth.
    More than $17 billion poured out of stock funds during the
week ended Dec. 12, the most since June, while a six-week high
of $12 billion fled bond funds, as mutual fund withdrawals
overwhelmed ongoing demand for exchange-traded funds (ETFs).
    The withdrawals appeared to show a wild year of up-and-down
trading testing the patience of investors now facing a rare
occurrence - losses across both stock and bond funds.
    The Federal Reserve on Wednesday raised its target interest
rate for a ninth time in about three years. 
    But the U.S. central bank's efforts to restore normal policy
a decade after it responded to financial crisis by pushing rates
near zero has irked markets. Stocks slid, with the S&P 500 index
 down 1.5 percent for the day and 2.9 percent for the
year, including dividends.
    In addition to the rate hikes, investors have been worried
about excessive corporate borrowing, rising short-term bond
yields, U.S.-China trade tensions and slowing growth in
corporate profits. 
    Individual investors are the most pessimistic about stock
performance they have been in more than five years, with 49
percent expecting the market to fall in the next six months,
according to a widely followed survey by the American
Association of Individual Investors.
    Yet the withdrawals represent a fraction of a percent of
overall mutual fund assets, said Sean Collins, ICI's chief
economist, in a statement. He said mutual fund investors are
responding "moderately" to market activity, and "for the most
part are maintaining their investment plans and asset
allocations."
    The figures show $34.8 billion in withdrawals overall for
the week, reflecting net activity in mutual funds and ETFs but
not money-market funds where investors park cash.
    The following table shows estimated ICI flows for mutual
funds and ETFs (all figures in millions of dollars):
               12/12    12/4    11/28    11/20   11/14
 Equity        -17,410  4,585   -6,348   -285    3,970
    Domestic   -11,904  5,391   -4,614   -855    2,679
    World      -5,506   -807    -1,734   570     1,291
 Hybrid        -5,502   -3,448  -3,391   -2,476  -2,103
 Bond          -12,021  -5,242  -3,535   -3,798  -2,313
    Taxable    -12,199  -4,607  -2,639   -3,220  -1,543
    Municipal  178      -635    -896     -578    -770
 Commodity     155      -321    4        -65     413
 Total         -34,778  -4,426  -13,270  -6,624  -34
    

 (Reporting by Trevor Hunnicutt
Editing by James Dalgleish)
  
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