June 13, 2019 / 7:40 PM / 5 days ago

Risk appetite emerges as U.S.-based equity funds attract $4.4 billion

(Reuters) - U.S.-based equity funds attracted $4.4 billion of inflows in the week ended Wednesday, following two consecutive weeks of cash outflows totaling $34 billion, according to Refinitiv’s Lipper, as the United States and Mexico struck a deal to avert tariffs.

U.S.-based high-yield junk bond funds - which move in sympathy with equity flows - attracted more than $1.7 billion of inflows in the week ended Wednesday, also following two straight weeks of cash withdrawals, Lipper said.

Tom Roseen, head of research services at Lipper, said it was “definitely a risk-on week” with net new money into corporate investment-grade bond funds of more than $4 billion.

“Interestingly, though, we saw retail investors being net redeemers of equity funds at negative $4.9 billion, while authorized participants were net purchasers of equity ETFs at plus $9.4 billion. So once again it was a tale of two cities,” Roseen said.

Mom-and-pop investors “appear to be content sitting on the sidelines until the trade deals are completed, parking cash into the money market funds of more than $12.9 billion,” he said.

Mom-and-pop investors are also putting money into select bond fund classifications: corporate investment-grade debt funds of plus-$1.2 billion and municipal bond funds of plus-$887 million, their 23rd consecutive week of net inflows.

Reporting by Jennifer Ablan; editing by Phil Berlowitz and Leslie Adler

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