July 20, 2017 / 10:54 PM / a year ago

UPDATE 1-U.S. taxable bond funds gather most cash since March -Lipper

 (Adds details on mutual funds and ETFs, analyst quote, table,
    By Trevor Hunnicutt
    NEW YORK, July 20 (Reuters) - U.S. fund investors shifted
$7.6 billion to the safe harbor of taxable bonds during the most
recent week, Lipper data showed on Thursday, as Republicans
efforts to pass major healthcare policy stalled.
    The bond funds took in the most cash since March, and the
rotation from domestic to international stocks accelerated, the
research service's data for the week ended July 19 showed. U.S.
equity funds bled $5.5 billion, but funds focused on shares
abroad pulled in $3 billion.
    The U.S. dollar and Treasury yields lost ground earlier this
week as Republican efforts to overhaul Obamacare collapsed and
softening economic data added to the uncertainty about the pace
of future interest rate hikes by the Federal Reserve.

    Falling yields raise existing bonds' prices.
Investment-grade debt funds pulled in $3.8 billion, continuing
an unbroken streak of inflows this year. High-yield funds
attracted $2.2 billion, their best week since April, following
four weeks of withdrawals.
    "Retail money has returned in the usual way - chasing
performance," wrote Bank of America Corp credit
strategists Hans Mikkelsen and Yunyi Zhang in a note on Tuesday.
    Skittish investors skirted domestic stocks, with healthcare
stocks posting their largest weekly withdrawals since May, $296
    Financial sector funds recorded $179 million in withdrawals
as Goldman Sachs Group Inc on Tuesday reported a 40
percent slump in bond trading revenue and the weakest
commodities results in its history as a public company for the
second quarter.
    Oil prices have rebounded from prices under $43 a
barrel last month in New York, to nearly $47, but energy stock
funds nonetheless posted $465 million of outflows. That amounts
to those funds' largest withdrawals since September 2016.
    International stocks continued to be popular. Investors sent
$1.6 billion to emerging market stock funds based in the United
States, their best week of flows since March. 
    Precious metals commodities funds, including those invested
in gold, posted $668 million in withdrawals, their largest
outflows since December even though the funds' performance was
positive for the week.
    The following is a breakdown of the flows for the week,
including mutual funds and exchange-traded funds:
 Sector                    Flow Chg  Pct of    Assets     Count
                           ($ blns)  Assets    ($ blns)   
 All Equity Funds          -2.588    -0.04     6,090.018  11,495
 Domestic Equities         -5.540    -0.13     4,243.403  8,231
 Non-Domestic Equities     2.952     0.16      1,846.615  3,264
 All Taxable Bond Funds    7.648     0.31      2,473.946  5,781
 All Money Market Funds    -5.631    -0.23     2,465.656  1,090
 All Municipal Bond Funds  0.299     0.08      388.621    1,395
 (Reporting by Trevor Hunnicutt; editing by Jennifer Ablan and
Tom Brown)
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