November 7, 2018 / 6:59 PM / 9 days ago

Investors pull $18.5 bln from U.S. bond funds in 1 week -ICI

    By Trevor Hunnicutt
    NEW YORK, Nov 7 (Reuters) - U.S. fund investors fled bonds
at the fastest pace since 2013 in the final week of October,
worried about rising interest rates and tightening monetary
policy, Investment Company Institute (ICI) data showed on
Wednesday.
    More than $18.5 billion of mutual fund and exchange-traded
fund assets flowed out the debt market during the week ended
Oct. 31, the most since the "Taper Tantrum" panic of June 2013,
when markets worried about the U.S. Federal Reserve planning to
stop buying bonds.
    Fed policy has again helped drive investors to reconsider
their bond holdings after pouring hundreds of billions of
dollars into debt products since the 2007-2009 global financial
crisis. The latest withdrawals marked a fourth straight week of
outflows, according to the trade group.
    U.S. Federal Reserve policymakers seem on course to deliver
their fourth rate hike of the year in December - the most in any
calendar year since 2006 - while letting the Fed's large
holdings of bonds accumulated during the financial crisis roll
off.
    "When rates rise from a very low level, bond yields and
stocks can go up at the same time," said David Kelly, chief
global strategist at JPMorgan Chase & Co's funds business.
    Investors added the most cash in six weeks - $5.6 billion -
to stock funds during the same week as strong quarterly earnings
reports rolled in, ICI said. Year-over-year profit growth for
the S&P 500 is at 27.7 percent, with most companies
beating Wall Street forecasts, according to Refinitiv IBES data.
    The following table shows estimated ICI flows for mutual
funds and ETFs (all figures in millions of dollars):
                 10/31   10/24    10/17    10/10  10/3/2018
 Equity          5,642   3,054  -12,822   -2,542     -4,282
    Domestic     6,377   4,012  -14,426   -3,044     -4,806
    World         -735    -958    1,605      502        524
 Hybrid         -3,438  -2,215   -2,574   -1,812     -2,099
 Bond          -18,517  -7,043   -5,637   -7,137      6,494
    Taxable    -17,331  -6,865   -4,327   -5,484      6,497
    Municipal   -1,186    -179   -1,310   -1,653         -3
 Commodity          43     344      211      138       -188
 Total         -16,270  -5,860  -20,821  -11,353        -74
 
 (Reporting by Trevor Hunnicutt; Editing by Dan Grebler)
  
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