U.S. Markets

U.S. stock funds attract most cash in seven weeks: ICI

NEW YORK (Reuters) - U.S. fund investors dashed into domestic stocks, pouring the most cash in seven weeks into the market, according to Investment Company Institute (ICI) data on Wednesday.

The funds collected $6 billion in the seven days through Dec. 6, according to the trade group, as the market is poised to close 2017 with another strong year of gains under its belt.

“We’re in literally the longest amount of days since a 5 percent drawdown in 25 years,” said Gary Droz, managing director at MainLine Private Wealth LLC, referring to a significant U.S. stock selloff.

“It’s a weird scenario, and weird scenarios don’t last forever.”

Combined with the $2.7 billion taken in by funds focused on equities abroad, stock funds overall attracted $8.6 billion.

U.S. job growth has been strong, and Republicans have been moving closer to delivering a tax bill that could cut corporate taxes, boost profits and push stocks even higher.

The rotation from mutual funds, many of which are actively managed, to largely cheaper index-tracking exchange-traded funds (ETFs) accelerated during the week.

Investors pulled $9.3 billion from domestic stock mutual funds and moved $15.2 billion into their ETF counterparts.

The popularity of stocks did little to disrupt demand for bonds, which has been strong throughout 2017. U.S.-based taxable bond funds pulled in $6.5 billion during the week, marking a 53rd straight week of inflows, ICI said.

By contrast, municipal bond funds posted $312 million of withdrawals in their first week of outflows in 22 weeks, according to ICI. U.S.-based commodity fund inflows were $421 million, the largest in 10 weeks, ICI said.

Reporting by Trevor Hunnicutt; Editing by Lisa Shumaker