November 8, 2018 / 11:35 PM / 9 months ago

UPDATE 1-U.S. fund investors pull most cash in three weeks from stocks -Lipper

 (Adds details on funds, analyst quote, table)
    NEW YORK, Nov 8 (Reuters) - Fund investors failed to be
wowed by U.S. elections, pulling $8.5 billion from U.S.-based
stock funds during the latest week, Lipper data showed on
    The largest withdrawals from U.S. stock funds in three weeks
came even as optimism lifted stocks the day after Democrats won
control over the House of Representatives on Tuesday, leaving 
Republicans in control of the Senate and White House. Such a
divided government may do little to shake up a strong economy,
some investors said.
    But fund investors' overwhelming selling in the days prior
to the election dominated mutual funds and exchange-traded fund
sales data during the week ended Wednesday. Investors were
spooked by rocky October trading that temporarily erased the S&P
500's gains for the year and some saw fit to take risk
off the table on days when markets gained in more recent days.
    "Overall people were concerned about what the economy could
be doing going forward," said Tom Roseen, head of research
services for Refinitiv's Lipper research service. "People are
saying the market's still pretty dear and are hesitant to jump
back in."
    Economic data and corporate earnings remain strong, creating
the possibility of a "Santa Claus" rally as 2018 comes to a
close, Roseen said. Quarterly S&P 500 profits are up 27.7
percent over the year prior, the best result since 2010,
according to Refinitiv IBES data.
    Nonetheless investors continue to crowd in the relative
safety of short-term Treasuries less affected than stocks by
growth and less affected than longer-term bonds by interest
rates, which could rise further under a Federal Reserve worried
about inflation pressures in a strong economy.
    Treasuries funds took in $3.7 billion during the week
despite falling prices, the most since January 2016, while
demand for short-term government bonds was at a 2-1/2-year high
of $2.4 billion.
    Rates eased after the election as investors doubted a
divided government would further cut taxes, keeping deficits
spending somewhat in check, and as a relief rally in equities
reduced safe-haven demand.
    That helped U.S.-based funds invested in emerging market
stocks collect $1.2 billion, the most cash since April. Emerging
markets have been hobbled by rate hikes that have attracted
money away from their countries, made dollars more precious and
consequentially made repaying greenback-denominated debt harder.
    The following is a breakdown of the flows for the week,
including mutual funds and ETFs:
 Sector                    Flow Chg  Pct of    Assets     Count
                           ($ blns)  Assets    ($ blns)   
 All Equity Funds          -8.497    -0.12     7,235.873  12,196
 -Domestic Equities        -8.683    -0.17     5,181.814  8,656
 -Non-Domestic Equities    0.186     0.01      2,054.059  3,540
 All Taxable Bond Funds    4.124     0.15      2,781.508  6,037
 All Money Market Funds    23.924    0.87      2,778.994  1,029
 All Municipal Bond Funds  -0.256    -0.06     421.002    1,438
 (Reporting by Trevor Hunnicutt; editing by Diane Craft)
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