November 2, 2018 / 12:14 AM / 18 days ago

UPDATE 1-U.S. fund investors bail on bonds in final week of October -Lipper

 (Adds details on funds, quote, table)
    By Trevor Hunnicutt
    NEW YORK, Nov 1 (Reuters) - U.S. fund investors' patience
with debt is starting to wear thin as monetary policy tightens,
with Lipper data on Thursday showing the largest weekly
withdrawals from taxable-bond funds since February.
    Investors clawed back nearly $8.8 billion from U.S.-based
bond funds, with the largest withdrawals of the year recorded
from products invested in municipal debt, investment-grade
corporates and leveraged loans, according to the research
service.
    The data covers estimated activity in mutual funds and
exchange-traded funds during the week ended Oct. 31.
    Withdrawals spanned fixed-income categories. Municipal bonds
are issued by U.S. cities and states, but offer holders tax
advantages. Investment-grade bonds come from corporations with
relatively stronger balance sheets while leveraged loans often
come from heavily-indebted companies.
    Short-duration Treasury funds, ostensibly low risk as rates
rise, attracted $2 billion.
    "It was definitely a risk-off strategy," said Pat Keon,
senior research analyst at Lipper. "It was pretty much across
the board."
    U.S. Federal Reserve policymakers seem on course to deliver
their fourth rate hike of the year in December - the most in any
calendar year since 2006 - while letting its large holdings of
bonds accumulated during the financial crisis roll off.
    The U.S. government and optimistic corporate executives
continue to borrow even as investors are watching the economy
closely for signs it is peaking.
    Stock fund investors, in the midst of third-quarter earnings
reports, took a rosier view. Those funds attracted $2.4 billion
in a second straight week of positive sales.
    But technology sector stock funds posted $1.4 billion in
withdrawals, the most pulled from those products since February
2015, as market-leading tech names dragged equity indexes lower.
    
    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          2.402     0.04      6,964.139  12,145
 Domestic Equities         4.810     0.10      4,978.930  8,623
 Non-Domestic Equities     -2.408    -0.12     1,985.209  3,522
 All Taxable Bond Funds    -7.469    -0.27     2,751.600  5,985
 All Money Market Funds    0.176     0.01      2,756.963  1,038
 All Municipal Bond Funds  -1.321    -0.32     415.080    1,388
 
 (Reporting by Trevor Hunnicutt; editing by Jennifer Ablan, G
Crosse)
  
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