Funds News

UPDATE 2-U.S. fund investors hike stock exposure by most since March -Lipper

 (Adds details on mutual funds and ETFs, analyst quote)
    By Trevor Hunnicutt and Lewis Krauskopf
    NEW YORK, May 17 (Reuters) - U.S. fund investors returned to
equity markets in force during the latest week, pouncing on
economic confidence in their home market, Lipper data showed on
    Investors injected $10.1 billion into stocks as U.S.
companies still seeing the benefits of a lower corporate tax
rate continue to coast to higher profits. Healthcare stocks
leapt on optimism that U.S. regulations on drug pricing could be
tamer than feared.
    Domestic stock funds pulled in $9.1 billion, the most since
March, while their international-focused counterparts pulled in
about a tenth of that amount, according to the research service,
whose data covers mutual funds and exchange-traded funds (ETFs)
based in the United States for the seven days through May 16.
    "It is a positive sign for how investors are feeling about
the markets right now," said Pat Keon, senior research analyst
for Thomson Reuters' Lipper unit.
    Relatively strong economic conditions compared to other
countries have helped push U.S. bond yields and the dollar
higher. Those factors could still conspire to tighten financial
conditions dramatically, but have not done so yet.
    That is good news for domestic stock funds that faced three
straight months of withdrawals, threatened by the prospect of
higher inflation and what was once a more bullish view on growth
prospects outside the United States.
    The Russell 2000 index of smaller U.S. companies -
less exposed than large companies to the negative effects of a
stronger dollar and rising oil prices - closed at a record high
on Thursday.
    Investors plowed $819 million into healthcare and biotech
funds during the week, the most since July 2017, as U.S.
President Donald Trump released his plan to lower drug prices.

    In a speech last Friday, Trump blasted drugmakers and
healthcare "middlemen" for making prescription medicines
unaffordable for Americans, but his administration avoided
aggressive direct measures to cut prices.
    Analysts and investors have debated whether the speech and
proposals would be a "clearing event" that paves the way for
increased investor interest in the sector, which has
underperformed in 2018. U.S.-based healthcare funds are on pace
for their third straight year of withdrawals.
    Investors could still grow wary of the sector, with
lingering concerns about healthcare becoming a major campaign
issue as November's U.S. Congressional elections approach.
    The following is a breakdown of the flows for the week,
including mutual funds and ETFs:
 Sector                    Flow Chg  % Assets  Assets     Count
                           ($blns)             ($blns)    
 All Equity Funds          10.084    0.14      7,296.570  12,290
 Domestic Equities         9.109     0.18      5,008.483  8,761
 Non-Domestic Equities     0.976     0.04      2,288.086  3,529
 All Taxable Bond Funds    2.629     0.10      2,763.157  6,072
 All Money Market Funds    13.616    0.51      2,691.745  1,042
 All Municipal Bond Funds  0.207     0.05      404.104    1,454
 (Reporting by Trevor Hunnicutt and Lewis Krauskopf
Editing by Tom Brown and Chris Reese)