March 28, 2018 / 5:36 PM / 3 months ago

Turnabout for U.S. stock fund demand over fair trade rift

NEW YORK (Reuters) - U.S. fund investors reversed course, skimming $17 billion off domestic stock funds during the most recent week, data from the Investment Company Institute (ICI) showed on Wednesday.

FILE PHOTO - Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., March 21, 2018. REUTERS/Lucas Jackson

The withdrawals, during the week ended March 21, came as the prospect of a trade clash between the United States and China shook investors, and just one week after U.S.-based domestic equity funds took in $19 billion, the most cash in nine months.

President Donald Trump’s move to impose tariffs on up to $60 billion of Chinese imports drove fears about the impact on the global economy. Stocks have continued selling off in the days since.

“I’m seriously worried the market could give back even more,” said Linda Zhang, chief executive of Purview Investments LLC. “The trade rhetoric is very, very troubling.”

Markets have been whipsawed in a give-and-take this year marked by shifts from excitement over signs of economic growth to hand-wringing over higher inflation, yields and the prospect that the technology giants will be more heavily regulated. Just earlier this month, tech funds took in the most money since the year 2000’s mania.

U.S. mutual and exchange-traded fund (ETF) investors retained their taste for international stocks, with world equity funds raking in $3.3 billion in a streak of weekly inflows unbroken in more than a year, according to the ICI, a trade group.

Bond funds, meanwhile, attracted $5.3 billion. Commodity funds, including those that invest directly in safe-haven gold, pulled in $938 million, the most cash in six weeks, ICI said.

In addition to the fast-money equity trading, the March 15 to March 21 fund data were influenced by unusual trading patterns as investors unwound positions in futures and options contracts that expired simultaneously, a phenomenon known as “quadruple-witching.”

Reporting by Trevor Hunnicutt; Editing by Cynthia Osterman

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