U.S. investment-grade bond fund inflows biggest in nearly two years: Lipper

[January 13, 2017]  By Sam Forgione and Jennifer Ablan

NEW YORK (Reuters) - Investors in U.S.-based funds poured $4 billion into investment-grade corporate bond funds in the week ended Jan. 11, marking the funds' biggest inflows since early February 2015, data from Thomson Reuters' Lipper service showed on Thursday.

Taxable bond funds overall attracted $3.9 billion in new cash to mark their biggest inflows since late September. Stock funds attracted $2.4 billion in inflows to mark their third straight week of new demand.

The inflow into U.S.-based investment-grade corporate bond funds marks the fourth such week of inflows, Lipper said.

"The relatively strong stability and income investment-grade corporate bonds provide are particularly appealing amid the uncertainty that has materialized to start the year," said Todd Rosenbluth, director of ETF & Mutual Fund Research at CFRA.

U.S.-based high-yield "junk" bonds also enjoyed another week of investors hunting for yield. The group posted inflows of $564 million over the weekly period, the third straight week of inflows, according to Lipper.

Pat Keon, senior research analyst at Thomson Reuters Lipper, noted that Loan Participation, also known as bank loan funds, have enjoyed a good run since the presidential election: More than $6.9 billion, including inflows of $795 million last week.

"It is a favorable environment for bank loans at U.S.-president-elect Donald Trump’s promise of less regulation will make it easier to loan money out and rising interest rates favor them due to their floating rates," Keon said.

For their part, U.S.-based stock funds attracted $2.4 billion in the week ended Wednesday, marking their third straight week of inflows. That said, all of those inflows went into popular exchange-traded funds: U.S. stock ETFs attracted $3.3 billion of inflows over the weekly period, and U.S.-based stock mutual funds posted $916 million of outflows.

Overall, U.S.-based domestic-focused stock funds posted $386 million of cash withdrawals, their first outflows in three weeks, while U.S.-based non-domestic-focused stock funds attracted $2.8 billion inflows, their biggest since March 2016.

U.S.-based money market funds posted $21.1 billion of outflows over the weekly period, their biggest in three weeks, Lipper said. U.S.-based Emerging Markets equity funds attracted $582 million of new cash, their second straight week of inflows, while U.S.-based Emerging Markets debt funds attracted $172 million over the weekly period, their second week of inflows.

The following is a broad breakdown of the flows for the week, including ETFs (in $ billions):

Sector Flow Chg % Assets Assets Count

($Bil) ($Bil)

All Equity Funds 2.430 0.04 5,543.802 11,819

Domestic Equities -0.386 -0.01 3,978.984 8,440

Non-Domestic 2.816 0.18 1,564.818 3,379

Equities

All Taxable Bond 3.862 0.17 2,318.383 5,960

Funds

All Money Market -21.088 -0.89 2,355.005 1,041

Funds

All Municipal Bond 0.974 0.27 368.486 1,407

Funds

(Reporting by Sam Forgione; Editing by Jennifer Ablan, Bernard Orr)

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