June 27, 2018 / 6:13 PM / 3 months ago

Investors dump $5 billion of equity funds on U.S.-China trade fight: ICI

NEW YORK (Reuters) - U.S.-China trade tensions drove investors to pull $5.16 billion from equity exchange-traded funds and mutual funds in favor of bonds for the week ended June 20, the Investment Company Institute said on Wednesday.

Cash outflows from equities were led by domestic long-term mutual funds, which ceded $3.11 billion after $1.15 billion the prior week. Equity ETFs had negative net outflows of $3.59 billion, seven days after reporting $7.54 billion of inflows.

“The risk off trade was clearly visible in last week’s fund flows,” said Scott Anderson, chief economist at Bank of the West. “Uncertainty of trade protection is becoming a growing concern for investors as the U.S.-China trade war heats up.”

On June 15, both the United States and China released lists of imports to be targeted by tariffs.

Total ETF and mutual fund bond flows stayed positive for the 18th straight week, attracting $4.55 billion compared with $5.56 billion a week earlier.

Commodity fund investment declined $264 million as “investors scaled back expectations for emerging market growth,” Anderson said.

Hybrid funds experienced withdrawals of $848 million.

Demand for all funds was broadly negative at $1.72 billion, compared with inflows of $9.95 billion in the previous week.

Reporting by James Thorne; Editing by Jennifer Ablan and Richard Chang

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