U.S.-based gold, stock
funds suffer withdrawal in latest week: Lipper
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[October 28, 2016]
By Trevor Hunnicutt
NEW
YORK (Reuters) - Investors pulled $902 million from U.S.-based funds
invested in gold and other precious metals, Lipper data for the latest
week showed on Thursday, as a stronger dollar and interest-rate hike
fears weighed on the safe-haven asset.
The outflows pushed the funds to their highest level of withdrawals
since December 2013.
Bets that the U.S. Federal Reserve will hike rates in December have
pushed the dollar to nine-month highs against a basket of currencies
this week.
"If we have continued strength in the dollar, that plays on commodities
that are priced in the dollar," such as gold, said Tom Roseen, head of
research services for Thomson Reuters Lipper.
Gold is prized in times of political uncertainty, such as the U.S.
presidential election on Nov. 8, while higher interest rates lift the
opportunity cost of holding non-yielding assets and boost the dollar.
Inflation-protected bond funds in the United States took in $385 million
in their largest week of inflows since April, Lipper said. The bonds
defend against rampant inflation, which also could trigger Fed rate
hikes.
STOCK FUND LIQUIDATIONS
Mutual fund liquidations pushed cash withdrawals in U.S.-based stock
funds to their highest point since August 2015, with $16.6 billion in
outflows, according to Lipper.
The outflows were exacerbated by the Vantagepoint mutual funds
liquidating. They are being converted to collective investment trusts (CITs)
in an effort to cut fees.
![](http://archives.lincolndailynews.com/2016/Oct/28/images/ads/current/charrons_bch041713.png)
CITs, which are not regulated by the U.S. Securities and Exchange
Commission, can only be offered to qualified retirement plans, such as
401(k)s, and their less-stringent reporting requirements translate into
lower operating expenses.
The week's numbers also reflect the closure of the 47-year-old Putnam
Voyager Fund, which is being merged into the Putnam Growth Opportunities
Fund.
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Stock
mutual fund flows have been under pressure this year, facing competition from
lower-cost investments, including the collective trusts and exchange-traded
funds.
Money-market funds absorbed $19.8 billion in the seven days through Oct. 26, the
most money since August, the research service's data showed.
The funds are showing signs of stabilizing after reforms took effect on Oct. 14
requiring that some funds let their share prices float with the market and
possibly impose redemption fees in times of market stress.
![](http://archives.lincolndailynews.com/2016/Oct/28/images/ads/current/encompass-grain-farmers-Daily-after-book.png)
"My expectation is you see the market start to grow very significantly as we
move through the end of this year," said Tom Callahan, head of the global cash
management business at BlackRock Inc.
The following is a broad breakdown of the flows for the week, including ETFs:
Sector
Flow Chg Pct of Assets ($ Count
($ blns) Assets blns)
All Equity Funds -16.604 -0.31 5,254.517 12,051
Domestic Equities -13.958 -0.37 3,700.815 8,611
Non-Domestic Equities -2.646 -0.17 1,553.702 3,440
All Taxable Bond Funds 0.776 0.03 2,347.980 6,047
All Money Market Funds 19.840 0.85 2,345.582 1,031
All Municipal Bond Funds 0.335 0.09 393.547 1,413
(Reporting by Trevor Hunnicutt; Editing by Jonathan Oatis)
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