May 9, 2018 / 7:48 PM / 17 days ago

U.S. bond funds take in cash for eleventh straight week: ICI

NEW YORK (Reuters) - U.S. fund investors are shifting from stocks to bonds and piled into debt markets for an 11th straight week, Investment Company Institute (ICI) data showed on Wednesday.

FILE PHOTO: A U.S. Dollar note is seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration/File Photo

Investors have been moving into bonds less sensitive to rising rates in recent weeks. They have sought to shore up portfolios against higher market volatility while taking advantage of yields plumped up by U.S. Federal Reserve rate hikes.

A sharp decline in bond prices during April abated as the month drew to a close. Yields on benchmark 2-year Treasuries are at 2.53 percent, up from 2.28 percent at the beginning of the April. Bond prices fall as their yields rise.

U.S.-based bond mutual funds and exchange-traded funds (ETFs) took in $3.5 billion during the seven days through May 2, according to the trade group. U.S. fund investors pulled $2.5 billion from stocks.

Short-term corporate bond funds tracked by Thomson Reuters’ Lipper research unit attracted $3.3 billion in April, the most this year and a 22nd straight month taking in cash.

Commodities funds have been unable to claim their place as a safe-haven alternative even with an uptick in market volatility since the beginning of the year and geopolitical concerns over the U.S. clashing with Iran. U.S. President Donald Trump on Tuesday pulled the United States out of an international nuclear deal with that country.

Investors pulled $82 million from commodity funds, such as those that invest directly in gold, during the latest week, marking the first net withdrawals in five weeks.

The strength of the U.S. dollar has hobbled the investments, making the metal more expensive buyers using other currencies.

The following table shows estimated ICI flows for mutual funds and ETFs (all figures in million of dollars):

5/2 4/25 4/18 4/11 4/4/2018

Equity -2,459 -879 -251 5,213 -4,501

Domestic -2,992 -3,777 -2,377 3,775 -6,018

World 533 2,898 2,126 1,437 1,517

Hybrid -887 -633 -1,090 -1,101 -932

Bond 3,471 2,242 8,492 6,470 2,943

Taxable 3,634 2,338 9,321 7,166 3,053

Municipal -163 -96 -830 -696 -110

Commodity -82 508 167 1,120 547

Total 43 1,237 7,317 11,702 -1,944

Reporting by Trevor Hunnicutt; Editing by Cynthia Osterman

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