(Adds data on mutual funds and ETFs, analyst comments, table,
By Trevor Hunnicutt
NEW YORK, Feb 9 Investors showed an insatiable
demand for fixed income during the latest week, handing over the
most cash in about seven months to managers of U.S.-based
taxable-bond funds, Lipper data showed on Thursday.
The funds gathered $7.5 billion during the week through Feb.
8, marking the sixth straight week of inflows and their
strongest sales result since the week that ended July 13, 2016.
Investment-grade bond funds took in $4.9 billion during the
week, their largest inflows since October 2014, the data showed.
And emerging market debt funds rebounded with their largest
inflows since October, $358 million.
"This was a big week," said Pat Keon, senior research
analyst for Thomson Reuters Lipper. "It's part of the
enthusiasm, positive thoughts. People are willing to take risk."
Analysts for Bank of America Corp said part of the
demand for the funds is foreign buyers taking advantage of lower
costs to hold bonds denominated in U.S. dollars while hedging
their exposure to greenbacks.
"High grade bond fund/ETF inflows have really accelerated
this year and are currently running more or less at the highest
pace we have seen historically," the analysts wrote on Wednesday
in a note called "Not your father's bond fund inflows."
Inflation-protected bond funds attracted $439 million in
their ninth week of inflows, while investors added $855 million
to loan-participation funds in their 13th straight positive
showing. The categories include bonds designed to boost payouts
when consumer prices or interest rates rise, for instance in a
period of rapid economic growth.
Normally, rising inflation or interest rates would hurt a
bond's value, all else being equal.
U.S. President Donald Trump, who took office last month, and
his Republican Party have touted potential new economic stimulus
measures, such as tax cuts and infrastructure spending. U.S.
stocks have responded by scaling new peaks, while bond returns
have been less consistent.
Stock fund flows were mixed in the latest week, with demand
for funds invested in domestic stocks posting withdrawals of $99
million, compared to inflows of $12.7 billion the week before.
But stock funds invested internationally took in $2.5
billion in their fifth straight week netting cash, according to
Lipper. Emerging markets stock funds attracted $1.3 billion in
their best week since August 2016.
"As long as the economy keeps chugging along and things get
sorted out in Washington I think we may be ripe for a takeoff,"
The following is a broad breakdown of the flows for the
week, including mutual funds and exchange-traded funds.
Sector Flow Chg % Assets Assets Count
All Equity Funds 2.441 0.04 5,614.595 11,791
Domestic Equities -0.099 -0.00 4,011.786 8,416
Non-Domestic Equities 2.541 0.16 1,602.809 3,375
All Taxable Bond Funds 7.512 0.32 2,331.820 5,922
All Money Market Funds 1.289 0.06 2,314.926 1,033
All Municipal Bond Funds 0.304 0.08 369.006 1,398
(Reporting by Trevor Hunnicutt; Editing by Bill Rigby)