During the week, nearly $17 billion poured into equities, the
most in any week since June. Bonds took in even more cash, $19
billion, the most on records that date to 2013, according to the
trade group.
The rush of cash into rising markets shows the resiliency of
bonds, at least in terms of demand from investors, but also
highlights people's more ambivalent relationship with stocks.
Equities just a week earlier recorded a $21 billion withdrawal.
While they won much of that back during the most recent week, 80
percent of that money moved into products that focus on stocks
abroad, not in the United States. Domestic stock funds attracted
just $3.4 billion, ICI said.
"Many investors decided that it made sense to take profits,"
said Kristina Hooper, Invesco Ltd's global market strategist,
referring to the prior week.
"By the next week it was almost as if investors had done a 180
and were pouring money into equities. The whole time we've seen
fixed income remain popular."
Demand for bonds has endured yield spikes over the last two
months that pushed long-dated Treasuries' prices down sharply
and led billionaire bond veteran Bill Gross of Janus Henderson
Group plc to declare a bear market in bonds. The 2-year Treasury
yield is at its highest levels in nearly a decade, breaching the
2 percent mark. The 10-year is near 2.6 percent, up from 2.1
percent in September.
Investors responded to that threat by pouring $15.8 billion into
taxable bonds, the most in any week since June 2015, and another
$3.2 billion into municipal bonds, the most on records dating to
2013, according to the ICI. The data covers mutual funds and
exchange-traded funds (ETFs) based in the United States.
"There may not be a lot of difference between stocks and
Treasuries in terms of valuation," said Hooper.
"We want to be very vigilant because there's vulnerability in
stretched valuations."
(Reporting by Trevor Hunnicutt; Editing by Phil Berlowitz)
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