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Stock funds based in the United States returned $7.9 billion in
cash to investors, adding to a near-two-month streak that has
swept nearly $32 billion from the funds. That is the largest
weekly withdrawal for those funds since investors pulled $8.3
billion in December, according to ICI data through the week
ended April 27.
The funds' poor result comes despite a rebound in U.S. stock
prices. The benchmark S&P 500 <.SPXTR> is up 13 percent from its
February low. Yet fund investors have been less impressed with
economic growth prospects following meek first-quarter corporate
earnings.
"Though first-quarter earnings season has been moderately better
than expected," projections for the year are flat, said Todd
Rosenbluth, director of ETF & mutual fund research for S&P
Global Market Intelligence. "This is a drag of demand for U.S.
equity strategies."
Investors pulled $5.5 billion from U.S.-based funds focused on
domestic companies and another $2.4 billion from international
stock funds, the data showed.
Including exchange-traded funds, the outflows to U.S.-based
equity funds were a more moderate $3 billion, ICI said.
"Investors have been rotating toward equity ETFs and away from
equity mutual funds for a longer period of time, as investors
favor a lower cost alternative," said Rosenbluth.
Investment-grade bond funds attracted $3.1 billion, their ninth
week in a row drawing new money. Riskier high-yield funds added
$924 million. Overall, bond funds absorbed $8.3 billion in new
cash, according to ICI, a fund trade group.
"The Federal Reserve's citing of disappointing economic data in
its recent decision to hold off raising fed funds rate,
investors have been focusing on the safety of investment-grade
bond funds," Rosenbluth said.
Meanwhile, U.S. municipal bond funds took in $1.9 billion and
taxable government bond funds gathered $559 million, ICI said,
extending a streak of popularity for the relatively safe funds
that has lasted the entire year.
(Reporting by Trevor Hunnicutt; Editing by Alistair Bell)
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