February 3, 2017 / 12:45 AM / a year ago

UPDATE 1-Fizz comes back to U.S. stock fund flows, despite performance

(Adds details on mutual funds and ETFs, analyst and investor
quotes, table, byline)
    By Trevor Hunnicutt
    NEW YORK, Feb 2 (Reuters) - Investors hurled the most cash
at U.S.-based stock funds since the U.S. presidential election
during the latest week, Lipper data showed on Thursday,
restoring bets on a continuing rally even as it seemed to fade.
    U.S.-based equity funds took in $13.8 billion during the
week through Feb. 1, the biggest haul since the week immediately
following Donald Trump's November election. 
    Investors choice of where to put the money also mimicked the
post-election trade, with broad stock index exchange-traded
funds taking in the majority of equity inflows alongside
bank-sector funds, which attracted $1 billion during the week.
    The difference now is that those funds, which leapt after
the election, are no longer putting up large gains. The average
equity fund tracked by Lipper fell 0.8 percent, while financial
sector funds sank 1.3 percent during the week.
    Stock ETFs pulled in $15.3 billion over the weekly period,
while stock mutual funds posted cash withdrawals of $1.5
billion, Lipper noted.
    ETFs draw money from hedge fund and other institutional
traders, among others, but mutual funds are largely owned by
retail investors.
    "I wouldn't call it bottom-shopping but certainly buying the
dip," said Tom Roseen, head of research services for Thomson
Reuters Lipper. "The economy's strong."
    Trump, who took office last month, and his Republican Party
have touted cutting taxes and financial regulation.
    Banks are also hoping to profit from the three rate hikes
forecast by the Federal Reserve for 2017 since their revenues
are influenced by those rates.
    Yet the Fed chose to keep rates steady on Wednesday, helping
gold, which is sensitive to rising rates that could increase 
the opportunity cost of holding a non-yielding metal.
    Precious metals commodity funds gathered $434 million and
the most new cash since October.
    Bond investors also appeared sanguine about risk during the
    Taxable bond funds based in the United States attracted $2.8
 billion during the week, with funds invested in the highest
quality issuers taking in cash for the seventh straight week,
the data showed.
    "We've been putting people in corporate bond situations,"
said Andrew Brenner, a partner at National Alliance Capital
Markets, a broker-dealer. "They got expensive but I still think
they are in safe environment to be in."
    Less rate-sensitive categories within fixed income continue
to be popular. Loan-participation funds, which adjust payouts as
rates rise, took in $991 million in their 12th straight week of
inflows. Inflation-protected bond funds attracted $160 million,
their 8th straight week of inflows.
    The following is a broad breakdown of the flows for the
week, including mutual funds and exchange-traded funds:
 Sector                    Flow Chg  % Assets  Assets     Count
                           ($blns)             ($blns)    
 All Equity Funds          13.805    0.25      5,587.968  11,796
 Domestic Equities         12.681    0.32      3,992.278  8,427
 Non-Domestic Equities     1.125     0.07      1,595.690  3,369
 All Taxable Bond Funds    2.846     0.12      2,308.481  5,917
 All Money Market Funds    -12.372   -0.54     2,300.576  1,025
 All Municipal Bond Funds  0.014     0.00      368.463    1,400
 (Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and
Grant McCool)
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