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Some
$14.4 billion fled stock funds in the United States during the
seven days through Sept. 14, the data showed, the quickest pace
of outflows for the funds since a September 2015 global sell-off
that started in China led investors to seek cover.
Global stocks and many bonds sank together on Friday and have
traded turbulently in the days since after remarks by Federal
Reserve officials pointed to a potential U.S. rate hike even as
economic data and market turbulence seemed to push back against
the idea.
Notably, Boston Fed President Eric Rosengren said the Fed, long
hesitant to raise U.S. interest rates, increasingly faces risks
if it waits too much longer so a gradual policy tightening is
likely appropriate.
Paul Kim, head of exchange-traded fund strategy at Principal
Financial Group Inc, said markets are starting to appreciate
that fundamental value will have to drive market prices rather
than monetary policymakers. "You're in the last innings of
central bank policies being very accommodative," he said. Other
categories recorded exceptional outflows, too. Investors pulled
$2.9 billion from U.S.-based taxable bond funds, the largest
withdrawals for those funds since June, the data showed.
Funds that once courted yield-seeking investors were punished.
Utilities sector products posted $459 million in outflows during
their seventh straight week of withdrawals. High-yield bond
funds posted $2.5 billion in outflows.
Emerging-market bond funds posted $52 million in outflows,
according to the research service, a small number nonetheless
marking a turn for a category that has taken in money almost
every week since June.
Energy sector funds posted $907 million in outflows, the data
showed, the largest withdrawals since oil's price was tanking in
fall 2014. Crude has been unable to hold its peak for the year,
which it forged early in the summer.
Technology sector funds recorded $1.3 billion in outflows, the
largest withdrawals since Feb. 2015. Shareholders also demanded
redemptions from healthcare and real-estate sector funds.
Investors pulled $685 million from precious metals funds - the
most since July 2015 - signaling a potential rate hike this
year. The relative value of non-yielding gold often slips as
returns on other assets grow.
Treasury funds took in $447 million, even as long-maturity
government bonds sold off, a sign of investors spotting a buying
opportunity, said Pat Keon, research analyst for Thomson Reuters
Lipper.
(Reporting by Trevor Hunnicutt; editing by Jennifer Ablan and
Diane Craft)
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