May 24, 2017 / 5:58 PM / 2 months ago

U.S. funds devour bonds and international stocks -ICI

3 Min Read

    By Trevor Hunnicutt
    NEW YORK, May 24 (Reuters) - U.S. fund investors are
reducing exposure to their home stock market and flooding
taxable bonds and international shares with new cash, Investment
Company Institute data showed on Wednesday.
    U.S.-based funds that buy equities outside the country
attracted nearly $10 billion in the week that ended on May 17,
the trade group said, while taxable-bond funds pulled in $9.8
billion.
    Both fund categories have been drawing in cash for 24
straight weeks.
    The week measured by ICI included the worst one-day selloff
in U.S. stocks of the year, which followed reports that U.S.
President Donald Trump tried to interfere with a federal
investigation.
    Stocks have largely recovered those losses in the days
since, but they are getting no help from mutual funds and
exchange-traded funds.
    Domestic stock funds recorded $5.6 billion in withdrawals,
their third straight week of outflows and the highest figure in
six weeks, ICI said. 
    Before the outflows began, new money for the funds had been
falling from a February peak, despite volatility generally
hovering below its long-term averages after an eight-year bull
market.
    "There has been a flight to quality with U.S.-focused
investments," said Todd Rosenbluth, director of ETF and mutual
fund research at CFRA.
    Meanwhile, investors are betting a global economic growth
spurt is taking root outside the United States and could lift
relatively cheap stock prices. The ratios of equity prices in
Japan, Europe and emerging markets to estimated earnings for the
next year each reflect a discount to the United States,
according to Thomson Reuters data.
    The following table shows estimated ICI flows for mutual
funds and exchange-traded funds (all figures in millions of
dollars):
                5/17    5/10     5/3    4/26    4/19
 Equity        4,354   7,250   3,545  11,602   4,725
 -Domestic    -5,605    -984  -4,254   6,758   1,253
 -World        9,959   8,234   7,798   4,844   3,472
 Hybrid         -315     122  -1,386     566    -596
 Bond         10,381   6,358   7,168   8,614   3,229
 -Taxable      9,791   5,721   6,934   7,960   2,743
 -Municipal      591     637     234     653     487
 Commodity      -150     288     -14      -7     740
 Total        14,271  14,017   9,313  20,775   8,099
 

 (Reporting by Trevor Hunnicutt; Editing by Lisa Von Ahn)
  

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