October 18, 2017 / 5:00 PM / a year ago

Fund investors wary of greed amid U.S. stock rally

    By Trevor Hunnicutt
    NEW YORK, Oct 18 (Reuters) - U.S. fund investors stockpiled
more cash abroad and in bonds during the latest week, Investment
Company Institute data showed on Wednesday, resisting the
temptation to chase further returns from a bull market that has
lasted the better part of a decade.
    Funds invested primarily in stocks abroad and those holding
taxable bonds reeled in cash for a 45th consecutive week, the
ICI trade group said.
    Yardeni Research Inc Chief Investment Strategist Ed Yardeni
said gains in U.S. stocks might still lure investors eager to
profit, but that could push prices beyond reasonable levels and
leave them susceptible to cratering in a so-called melt-up.
    "We've had no meaningful correction since the beginning of
2016," Yardeni said.
    "The market just doesn't seem to be able to go down so the
path of least resistance has been up, and that's in the face of
a lot of turmoil in Washington and geopolitical issues that have
largely been ignored."
    The S&P 500 has delivered more than a 16 percent
return this year, including dividends, and more than 350 percent
since its March 2009 lows.
    Lately, though, easily won gains in U.S. stocks have led to
a bit more fear than greed among fund investors.
    U.S.-based bond funds have brought in more than $2 for every
$1 gathered by equity funds this year, according to data from
Thomson Reuters' Lipper research unit.
    Domestic stock funds posted $1.6 billion in withdrawals
during the week ended Oct. 11, with $3.1 billion in
exchange-traded fund (ETF) inflows offset by mutual fund
outflows, according to ICI.
    World stock funds attracted $5 billion and debt funds pulled
in $9.1 billion during the latest week, according to the ICI.
The data includes funds based in the United States.
    The following table shows estimated ICI flows for mutual
funds and ETFs (all figures in millions of dollars):
               10/11   10/4    9/27    9/20    9/13/2017
 Equity        3,407   -3,465  -6,792  1,006   5,003
    Domestic   -1,623  -5,878  -9,353  -2,137  2,097
    World      5,030   2,413   2,561   3,143   2,907
 Hybrid        -497    -1,295  -1,077  901     -903
 Bond          9,137   12,397  6,690   11,083  9,538
    Taxable    8,663   12,134  5,947   10,171  8,630
    Municipal  473     263     743     911     908
 Commodity     265     -357    861     -134    125
 Total         12,311  7,279   -317    12,856  13,763

 (Reporting by Trevor Hunnicutt; Editing by Tom Brown)
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