May 30, 2019 / 8:40 PM / 3 months ago

U.S.-based equity funds post $22 billion outflows amid trade tensions

(Reuters) - Investors rattled by U.S.-China trade tensions pulled roughly $22 billion from U.S.-based equity funds in the week ended May 29, according to data released by Refinitiv’s Lipper research service on Thursday.

U.S.-based investment-grade bond funds, which move in sympathy with equities, posted more than $5 billion of outflows in the week ended Wednesday, the largest weekly outflow since December 2015, according to Lipper.

At the lower end of the quality spectrum, U.S.-based high-yield junk bond funds posted $1.27 billion of cash withdrawals in the week ended Wednesday, Lipper added.

Investors sought shelter in their favorite safe havens in the latest week.

U.S.-based money-market funds attracted more than $17.5 billion in the week ended Wednesday, their sixth straight week of inflows, according to Lipper.

U.S.-based government-Treasury funds attracted over $1.4 billion in the week ended Wednesday, their third consecutive week of inflows, Lipper figures show.

Overall, U.S.-based taxable bond funds posted $5.1 billion of outflows in the week ended Wednesday, according to Lipper.

“Outflows for both equities and bonds were influenced by two significant liquidations during the week,” said Tom Roseen, head of research services at Lipper.

He said the Fidelity Total Market Index Fund, class F, accounted for $17.1 billion of the net equity outflows for the week, while Fidelity U.S. Bond Index Fund, class F, accounted for $6.5 billion of the fixed income net redemptions.

“So if one removes those from the picture, it was a fairly tame week, with the risk-off trade really being the net flows into money market funds,” Roseen said.

“That said, we did see authorized participants being net redeemers of equity ETFs to the tune of $3.2 billion, which is their third weekly redemption in four, while being net purchasers of fixed income ETFs for the third consecutive week, this week injecting $1.1 billion.”

Reporting by Jennifer Ablan; Editing by Tom Brown

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