October 10, 2018 / 11:02 PM / a month ago

TABLE-U.S. bond funds attract most cash in three weeks -ICI

    NEW YORK, Oct 10 (Reuters) - U.S. fund investors steered
cash into bonds during the most recent week, taking advantage of
the higher returns made possible by a selloff in debt markets,
Investment Company Institute (ICI) data showed on Wednesday.
    U.S.-based bond funds attracted $6.5 billion during the week
ended Oct 3, marking the largest figure in three weeks and a
33rd straight week of positive net sales for that category, the
trade group said. Stock funds, by contrast, counted $4.3 billion
in withdrawals, the most in four weeks.
    The ICI data covers a week that ended with Treasury yields
recording their biggest one-day rise since 2016 after strong
U.S. jobs data. Rising wages support a case for the U.S. Federal
Reserve to raise rates in December - and next year, too - to
head off inflationary pressures.
    Yet bond yields are a good predictor of their eventual
returns and higher returns are likely to draw more investors to
the asset, potentially at the expense of stocks.
    Within equities, trends also reversed during the recent
week, ICI data showed. Investors pulled cash from domestic stock
funds - and added to their internationally focused counterparts
- for the first time in three weeks.
    So far this year, U.S. stocks have dramatically surpassed
the negative return of their counterparts in international
developed and emerging markets. The U.S. benchmark S&P 500
 has returned 5.8 percent this year, including dividends.
MSCI's broad developed markets index is down 5.5 percent and its
emerging markets benchmark is off nearly 13 percent by the same
"total return" measure, which includes dividends.
    The end of the third quarter offers investors new data on
the health of the U.S. market's near-decade long rally, with
corporate results due in the coming weeks.
    The following table shows estimated ICI flows for mutual
funds and ETFs (all figures in millions of dollars):    
               10/3    9/26    9/19    9/12    9/5
 Equity        -4,284  -1,182  10,193  -3,371  -5,551
    Domestic   -4,808  930     10,544  -3,829  -7,009
    World      524     -2,112  -351    458     1,458
 Hybrid        -2,100  -1,767  -1,299  -1,673  -1,754
 Bond          6,525   1,702   4,339   7,188   3,510
    Taxable    6,527   2,087   4,223   7,158   3,506
    Municipal  -2      -385    116     30      4
 Commodity     -188    253     -91     -57     -411
 Total         -47     -994    13,142  2,088   -4,205
 
 (Reporting by Trevor Hunnicutt; editing by Diane Craft)
  
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