October 25, 2018 / 9:14 PM / 8 months ago

U.S. fund investors add stock exposure during volatile week: Lipper

(Reuters) - U.S. fund investors snapped up shares of stock funds during the latest week despite wild trading, adding $4.2 billion to the products, according to Lipper data on Thursday.

Demand for stock funds increased during a week when the S&P 500 benchmark erased its gains for the year, partly as more short-sellers demanded more exchange-traded funds (ETFs) that they could bet against, but also as some investors chose to buy the dip.

“It’s earnings season and we’re seeing some fairly good numbers come out,” said Tom Roseen, head of research services at Lipper, but he noted the market has also had a strong run for a decade.

“It’s been going up and up, and we need a breather.”

S&P 500 third-quarter earnings are up 23.6 percent over the year prior, with four-fifths of companies’ profits sitting above Wall Street’s expectations, according to Refinitiv data.

Technology sector stock funds pulled in $904 million during the week ended Oct. 24, the most cash since June, even as top tech names took a beating during the sell-off, Lipper said. The research service’s data estimates sales activity in U.S.-based mutual funds and ETFs.

Bond funds remain under pressure from rising rate expectations. Taxable bond funds posted $4.5 billion in withdrawals during the week, marking a fifth consecutive week of money being pulled out.

High-yield bond funds, which are more speculative and thought to be a leading indicator of interest in stocks, posted $2.4 billion in withdrawals during the week.

Reporting by Trevor Hunnicutt in Washington; Editing by Matthew Lewis and Chris Reese

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