July 13, 2017 / 9:41 PM / 5 months ago

U.S.-based stock funds net first cash in four weeks: Lipper

NEW YORK (Reuters) - Investors upped their stakes in U.S.-based equity funds for the first time in four weeks, Lipper data showed on Thursday, adding $3.5 billion to stocks in the latest week.

Overall, $5.5 billion rolled into exchange-traded stock funds heavily invested by fast-trading investors, while $2 billion flowed out of retail-oriented mutual funds during the week ended July 12.

Market gains during the week and moderate talk from U.S. Federal Reserve Chair Janet Yellen helped attract a bit of cash back into domestic stocks. The funds pulled in a net $641 million after three weeks of multibillion-dollar outflows and prices widely regarded as dear.

Yellen suggested Wednesday that there may be no need for many more hikes to bring rates to a “neutral” level that neither encourages nor discourages economic activity. Rates have been ultra-low to stoke growth after the 2007-2009 global financial crisis.

Pat Keon, Senior Research Analyst at Thomson Reuters’ Lipper unit, said investors were looking for a reason to step back into the market. “They’re hanging on any good news they can as an excuse to buy,” said Keon.

Financial sector funds raked in $1.1 billion in cash ahead of banks’ second-quarter earnings results.

Non-domestic equity funds, which have been popular for the better part of the year, reeled in another $2.9 billion.

Still, not all the flow trends were positive. Energy sector funds posted $407 million in withdrawals, the largest since April, even as oil has since Friday rebounded a bit from recent weakness.

And while taxable bond funds pulled in $949 million during the latest week after two weeks of withdrawals, high-yield bond funds posted $1.1 billion in outflows.

It was the fourth straight week of withdrawals for “junk” bond funds that have seen a pullback as investors question rich valuations.

Japanese stock funds posted $799 million in withdrawals, the most since December 2015, Lipper data showed.

The Bank of Japan offered to buy an unlimited amount of government bonds last week to calm the effects of a broad developed-market debt selloff. Yen weakness hurts investors in Japanese stocks who convert their returns back into a currency that has strengthened, like the U.S. dollar.

Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and Tom Brown

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