NEW YORK (Reuters) - U.S. fund investors rotated from international to domestic stocks for a third straight week, showing continued signs of risk aversion given a potential trade war and uncertainty over U.S. monetary policy, Lipper data showed on Thursday.
Investors pulled $2.2 billion from non-domestic equity funds and added $1.6 billion to their counterparts that buy shares in the United States, according to the data, which covers mutual funds and exchange-traded funds (ETFs) in the week through Sept. 26.
High-yield bond funds, which often trade in sympathy with stocks, posted $1.6 billion in withdrawals, the most since July. Low-risk money market funds pulled in $16.6 billion.
“There is a concern that the tariffs are going to cause more havoc than we’ve actually anticipated,” said Tom Roseen, head of research services at Thomson Reuters’ Lipper unit. “Before, people thought it was posturing.”
After China retaliated against U.S. tariffs on $50 billion in Chinese technology-focused imports, the Trump administration on Monday slapped 10 percent duties on another $200 billion of Chinese goods, including many consumer products.
The trade strife has highlighted gaps between a powerful resurgence in U.S. corporate profits while international economies have turned in more mixed performance.
The U.S. Federal Reserve raised interest rates on Wednesday, citing strong U.S. economic performance, largely setting aside the threats of rising tariffs. Investors continue to wonder just how quickly rates will rise and whether the tighter policies will pull investment away from international markets.
Some investors did take advantage of an apparent buying opportunity in markets challenged by trade friction, depositing $439 million into emerging market debt funds, the most since January. Funds based in the United States but invested primarily in Chinese stocks collected $276 million during the week.
Healthcare sector funds pulled in $921 million, the most since June, capping its rise as more defensive sectors have attracted more demand.
Reporting by Trevor Hunnicutt; editing by Jonathan Oatis