July 5, 2018 / 9:49 PM / 14 days ago

Most cash since 2008 flows out of U.S. equity funds in June: Lipper

NEW YORK (Reuters) - Investors played it safe in June, plucking the most cash out of U.S.-based equity funds since the peak of the 2008 global financial crisis as U.S. trade disputes discouraged risk, Lipper data showed on Thursday.

U.S.-based stock mutual funds and exchange-traded funds (ETFs) recorded $36.3 billion in withdrawals overall for the month of June, according to the research service, preliminary figures that would represent the largest withdrawals since October 2008.

The data also showed the funds have posted five straight weeks of withdrawals as the Trump administration’s tariffs on $34 billion of Chinese imports are due to go into effect on Friday.

During the most recent, holiday-shortened week, $8.3 billion moved out of U.S.-based equity funds and high-yield bond funds shed $1.7 billion, Lipper said. U.S. markets were closed on July 4 for the U.S. Independence Day holiday.

The possibility of a trade war has distracted markets from a robust U.S. economic picture, and minutes from the latest Federal Reserve meeting released on Thursday showed monetary policymakers share some of the markets’ concerns.

Most Fed policymakers “noted that uncertainty and risks associated with trade policy had intensified and were concerned that such uncertainty and risks eventually could have negative effects,” according to the minutes.

“The tariffs, the uncertain trade policy, and whether that could lead, that’s definitely been a negative,” said Pat Keon, senior research analyst for Thomson Reuters’ Lipper unit.

“Things will settle down over time once we actually know what the end result is going to be.”

Investors piled into safer, higher-quality investments, which included U.S.-based government-Treasury bond funds. That group attracted $980 million of net new cash for the week ended Wednesday, their fifth straight week of inflows, Lipper said.

Reporting by Trevor Hunnicutt; Additional reporting by James Thorne; Editing by Tom Brown and Richard Chang

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