February 7, 2018 / 7:40 PM / 18 days ago

U.S. stock, bond fund inflows slowed in week before steep selloff

    By David Randall
    NEW YORK, Feb 7 (Reuters) - U.S. fund investors' appetite
for stocks and fixed income weakened sharply last week ahead of
the largest decline in the benchmark S&P 500 in more than six
years, Investment Company Institute (ICI) data showed on
Wednesday.
    Some $4.3 billion rolled into U.S.-based stock funds and
exchange-traded funds in the week ended Jan. 31, a 65 percent
drop from the week before. Bond funds meanwhile took in $9.2
billion, down 38 percent from a week earlier, ICI said.  
    Rising interest rates and concerns about inflation have
brought volatility back into the stock market after a long
period of calm, leaving investors more skittish after a year in
which the S&P 500 rose 19 percent. 
    Yields on benchmark 10-year Treasury bonds,
which help set the rate for consumer loans ranging from auto to
mortgages, touched four-year highs last week, raising borrowing
costs for consumers and companies. 
    "We are reminding clients that inflation is going to come
back into the economy and that there are some benefits to having
a well-diversified portfolio," said Jeff Carbone, a managing
partner at Cornerstone Wealth, a Huntersville, North Carolina
based financial adviser with $1.3 billion in assets under
management. 
    At the same time, U.S. valuations were looking high before
the selloff that cumulated in the 4 percent drop in the S&P 500
on Monday, leaving investors looking at other opportunities, he
said. 
    World stock funds took in $7.9 billion during the most
recent week, down 20 percent from the week before, according to
ICI data. Flows to municipal bonds were $1.8 billion, down from
the $2.4 billion that flowed into the category the week before.
    The following table shows estimated ICI flows for mutual
funds and ETFs (all figures in million of dollars):
                1/31/18   1/24/18   1/17/18  1/10/18   1/3/18
 Equity          12,465    23,390    11,872   17,578  -20,998
    Domestic      4,531    12,908     1,719    3,838  -22,057
    World         7,933    10,482    10,153   13,740    1,059
 Hybrid            -178       100      -238     -150     -328
 Bond             9,253    15,122     9,261   18,918    7,564
    Taxable       7,363    12,659     6,804   15,762    7,055
    Municipal     1,890     2,462     2,457    3,156      509
 Commodity          386     1,412        45       -2     -305
 Total           21,926    40,024    20,940   36,345  -14,067
 
 (Reporting by David Randall; Editing by Meredith Mazzilli)
  
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