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Jennifer Ablan

Investors take 'Spring Break' from risk assets, pulling cash from junk-bond funds

2:46am IST

Investors took a break from their buying binge of risk assets in the week ended Wednesday, as U.S.-based high-yield junk bond funds posted $520 million in cash withdrawals, according to Refinitiv’s Lipper research service data on Thursday.

UPDATE 2-Investors take 'Spring Break' from risk assets, pulling cash from junk-bond funds

2:45am IST

(Adds flow figures for domestic equity funds and investment-grade corporate bond funds, table) By Jennifer Ablan April 25 Investors took a break from their buying binge of risk assets in the week ended Wednesday, as U.S.-based high-yield junk bond funds posted $520 million in cash withdrawals, according to Refinitiv’s Lipper research service data on Thursday. U.S.-based equity mutual funds posted $3.64 billion of cash withdrawals in the week ended Wednesday, extending their weekly outflows since mid-February, Lipper said. It added that U.S.-based equity exchange-traded funds posted $3.68 billion of cash withdrawals in the week ended Wednesday, marking their first weekly outflow since late March. U.S.-based domestic equity funds posted over $7.5 billion in net cash outflows in the week ended Wednesday, following two weeks of inflows totaling $9.3 billion, according to Lipper data. "High-yield funds did suffer net outflows, but the lion’s share of those outflows came from one ETF," said Pat Keon, senior research analyst at Lipper. He pointed out that the iShares iBoxx $ High Yield Corporate Bond ETF had net outflows of $382 million, which was a major contributor to the latest week's cash withdrawals. "This bears watching; I would suspect the negative flows from high yields is more of a one-week aberration than the reversal of the current trend," Keon said. High-yield debt correlates more to equities than other taxable bonds - due to having more risk than investment-grade debt, Keon said. "I would expect the recent round of positive data - retail sales data hitting its highest level in 18 months, unemployment claims at its lowest level in almost 50 years, and solid corporate earnings results - should carry the equity markets and pull high yield-debt along for the ride," Keon said. Higher up in the quality curve, U.S.-based investment-grade corporate bond funds enjoyed another week of inflows. For the week ended Wednesday, U.S.-based investment-grade corporate bond funds attracted $5.86 billion of net cash in week ended Wednesday, extending their weekly inflows since mid-January, Lipper data shows. Overall, U.S.-based taxable bond funds attracted roughly $6.4 billion in the week ended Wednesday, their seventh straight week of inflows, Lipper said. The following is a broad breakdown of the flows for the week, including mutual funds and exchange-traded funds: Sector Flow Chg % Assets Count ($Bil) Assets ($Bil) All Equity Funds -7.328 -0.10 7,319.934 11,790 Domestic Equities -7.503 -0.15 5,215.594 8,387 Non-Domestic Equities 0.176 0.01 2,104.340 3,403 All Taxable Bond Funds 6.396 0.22 2,865.699 5,819 All Money Market Funds 4.260 0.15 2,917.421 1,003 All Municipal Bond 1.576 0.35 454.398 1,345 Funds (Reporting by Jennifer Ablan; editing by Jonathan Oatis and Tom Brown)

Investors sent net $3.99 bln into U.S. stock mutual funds, ETFs last week -ICI

25 Apr 2019

By Jennifer Ablan NEW YORK, April 24 Investors sent a net $3.99 billion into mutual funds and exchange-traded funds that hold U.S. stocks last week, marking a second consecutive week of inflows into the domestic stock market, according to data released on Wednesday by the Investment Company Institute. The move back into the U.S. stock market came amid a rally that has sent the benchmark S&P 500 up by 17% year-to-date. It has been supported by a dovish Federal Reserve, hopes of a U.S.-China trade resolution and largely upbeat earnings. Despite the rally, investors have favored bond funds, boosted by the Fed's pause on interest-rate hikes this year. Bond funds, which include taxable and municipal debt funds, brought in a net $8.8 billion last week, continuing a streak of positive inflows over every full week of the year to date. The outsized inflows into bond funds have come at the expense of equity funds at a time when the economy is strengthening and could soon lead to a reversal as investors increase their appetite for riskier assets, BlackRock chief executive Larry Fink told Reuters in a recent interview . "We still saw, as an industry and at BlackRock, outflows in equities and this is one of the reasons why I believe the market is getting set up for huge inflows into equities," he said. Indeed, on Tuesday April 23, the S&P and Nasdaq closed at record levels. World stock funds, meanwhile, attracted a net $549 million, ending an eighth week losing streak. The following table shows estimated ICI flows for mutual funds and ETFs (all figures in millions of dollars): 4/17 4/10 4/3 3/27 3/20 Equity 4,542 5,811 -7,496 -11,085 -2,145 Domestic 3,993 6,210 -7,465 -10,896 1,474 World 549 -400 -31 -190 -3,619 Hybrid -976 -122 -3,575 -199 -636 Bond 8,809 7,813 11,275 7,884 10,552 Taxable 7,559 6,675 9,783 5,528 8,660 Munis 1,250 1,138 1,492 2,356 1,892 Commodity -101 -286 -983 141 393 Total 12,273 13,216 -778 -3,259 8,163 (Reporting by Jennifer Ablan Editing by Tom Brown)

Stock ETFs, corporate bonds, junk debt enjoy another week of inflows

19 Apr 2019

Investors' appetite for risk was on display yet again this week with huge cash inflows into U.S.-based stock exchange-traded funds, corporate bond funds and high-yield "junk" bond portfolios, according to Refinitiv's Lipper research service data on Thursday.

Bridgewater warns of peak U.S. profit margins, lower stock prices

17 Apr 2019

The major drivers of high U.S. corporate profit margins are unsustainable and "now under threat", which will eventually result in much lower equity prices, Bridgewater Associates, the world's largest hedge fund, said on Wednesday in a report.

U.S.-based investment-grade bond funds extend 2019's weekly inflow streak

12 Apr 2019

Investors put money to work in corporate credit markets in the latest week, with U.S.-based investment-grade corporate bond funds attracting about $3.47 billion in the week ended on Wednesday, the group's 11th consecutive weekly inflow, according to Refinitiv's Lipper research service data on Thursday.

UPDATE 1-U.S.-based investment-grade bond funds extend 2019's weekly inflow streak

12 Apr 2019

(Adds quotes from head of research services at Lipper, table) By Jennifer Ablan April 11 Investors put money to work in corporate credit markets in the latest week, with U.S.-based investment-grade corporate bond funds attracting about $3.47 billion in the week ended on Wednesday, the group's 11th consecutive weekly inflow, according to Refinitiv's Lipper research service data on Thursday. Appetite returned for their equity counterparts. U.S.-based equity funds attracted over $4.27 billion in the week ended on Wednesday, reversing the previous two weeks of cash withdrawals totaling about $15 billion. Tom Roseen, head of research services at Lipper, noted that while equity exchange-traded fund (ETF) flows remained solidly positive at over $10.3 billion, "conventional equity funds investors remained net redeemers for the week, pulling out $6 billion for the week." Investors in exchange-traded funds are thought to represent the institutional investor, including hedge funds. Mutual funds are thought to represent retail investors. "Despite plus-side returns for most of the broadly followed U.S. indices, investors remained cautious after learning February factory orders fell more than economists expected and ahead of the start of the Q1 2019 earnings reporting period," Roseen added. Fixed-income funds enjoyed another week of demand, thanks to Federal Reserve officials' pledge to be patient in raising interest rates this year. U.S.-based taxable bond funds attracted over $4.8 billion in the week ended Wednesday, extending their weekly inflow streak since March. U.S.-based high-yield bond funds attracted about $655 million for the week ended Wednesday, their fifth consecutive week of inflows, Lipper said. "The Federal Reserve’s dovish tone in its March meeting minutes along with tame wage growth numbers and news that the IMF lowered its outlook for global economic growth to 3.3% for 2019 were boons for longer-dated bond securities," Roseen said. "Investors were betting that neither the Fed nor other central banks were likely to hike rates anytime soon." The following is a broad breakdown of the flows for the week, including mutual funds and exchange-traded funds: Sector Flow % Assets Count Change Assets ($ blns) ($ blns) All Equity Funds 4.270 0.06 7,432.47 12,080 Domestic Equities 4.769 0.09 5,283.83 8,590 Non-Domestic Equities -0.498 -0.02 2,148.64 3,490 All Taxable Bond Funds 4.824 0.17 2,876.81 5,948 All Money Market Funds -8.644 -0.29 2,968.99 1,009 All Municipal Bond Funds 0.956 0.21 455.92 1,401 (Reporting by Jennifer Ablan Editing by James Dalgleish)

Huge inflows to U.S. high-yield bond, investment-grade debt funds

05 Apr 2019

Investors' appetite for risk-taking was strong in the latest week, as U.S.-based high-yield junk bond funds attracted more than $2 billion in the week ended Wednesday, marking the group's fourth consecutive week of inflows, according to Refinitiv's Lipper research service data.

UPDATE 2-Huge inflows to U.S. high-yield bond, investment-grade debt funds

05 Apr 2019

(Adds table) By Jennifer Ablan April 4 Investors' appetite for risk-taking was strong in the latest week, as U.S.-based high-yield junk bond funds attracted more than $2 billion in the week ended Wednesday, marking the group's fourth consecutive week of inflows, according to Refinitiv's Lipper research service data. Additionally, U.S.-based investment-grade corporate bond funds attracted over $2.9 billion in the period, extending their weekly inflow streak since early January, Lipper said. Investors' appetite for risk assets and their hunt for yield intensified after the Federal Reserve on March 20 brought its three-year drive to tighten monetary policy to an abrupt end. The Fed abandoned projections for any interest rate hikes this year amid signs of an economic slowdown, and said it would halt the steady decline of its balance sheet in September. "Bond funds in general took off ... when the Federal Reserve announced that it was taking its foot off the brakes - no more rate hikes until inflation warrants it and the balance sheet reduction program would be ending," said Pat Keon, senior research analyst at Lipper. In the fourth quarter, high-yield bond funds were the worst performing fixed-income funds peer group - down 4.54% - and the best in the first quarter - up 6.56%, Keon noted. "The flip in investor sentiment regarding high-yield funds can be seen in the group’s fund-flows results, as they had net outflows of $20.7 billion in Q4 - second worst quarterly net outflow ever - and they have taken in $14.3 billion in net new money in Q1 - the second best quarterly net inflow ever," Keon said. Leveraged loan funds have been in a prolonged slump, however. Keon said they have had 20 straight weeks of outflows during which time they have seen over $24 billion in cash withdrawals. "Unlike the rest of the fixed-income universe, it is a negative for loan funds when the Fed holds rates static - or decreases rates," Keon said. "This is because loans have floating rates that benefit from interest rate hikes." U.S.-based stock funds also posted another rough week. U.S. equity funds and domestic equity funds saw cash withdrawals of $3.9 billion and $3.8 billion, respectively. In the previous week, U.S. equity funds and domestic equity funds posted outflows of over $11 billion and $10.23 billion, respectively. The following is a breakdown of the flows for the week, including mutual funds and ETFs: Sector Flow Pct of Assets Count Change Assets ($ blns) ($ blns) All Equity Funds -3.902 -0.05 7,382.897 12,097 Domestic Equities -3.825 -0.07 5,242.661 8,589 Non-Domestic Equities -0.077 -0.00 2,140.235 3,508 All Taxable Bond Funds 3.694 0.13 2,866.557 5,956 All Money Market Funds 1.435 0.05 2,978.000 1,011 All Municipal Bond 0.714 0.16 454.621 1,400 Funds (Reporting by Jennifer Ablan; Editing by Dan Grebler and Chris Reese)

Aramco treads carefully on Saudi ties as it markets debut bond

04 Apr 2019

LONDON/NEW YORK/DUBAI For Saudi Aramco and its advisers, a debut international debt issue that could raise well over $10 billion presents a key challenge - how to forge an identity as a state-owned major while in the same league as the likes of Exxon Mobil and Shell.

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