U.S.-based stock funds hit by biggest withdrawals of 2017: ICI
NEW YORK Fund investors are ousting U.S. stocks in favor of bonds and international assets as they turn skittish on an aging bull market, data from the Investment Company Institute showed on Wednesday.
Investors pulled $12.7 billion from U.S.-based funds that buy domestic stocks, and plunged an additional $6.7 billion into international equity and $11.1 billion into bond funds, the trade group said. The data covers the week ended April 5.
Domestic stock fund outflows were the biggest since October 2016, while international equity inflows were the highest since July 2015, the ICI data showed.
Market returns have mirrored that pattern, with the S&P 500 .SPX down 1.3 percent over the last month in price terms, compared to the 1.1 percent rise of MSCI's gauge of stocks outside the United States .dMIWU00000PUS.
"Investors are getting more concerned about the U.S. equities, given political uncertainty and amid an increasingly aging bull market," said Todd Rosenbluth, director of ETF and mutual fund research at CFRA. "Last week's flows were sharply impacted by rare outflows to U.S. equity ETFs. Investors have sought the relative safety of taxable bond funds."
Political tension ranging from Syria to the Korean peninsula weighed on market sentiment this month, pressuring an eight-year bull market in U.S. stocks.
Meanwhile, global growth has created opportunities in other regions, such as emerging markets, said Stephen Cucchiaro, president and chief investment officer at 3EDGE Asset Management in Boston.
Fixed-income funds attracted their 15th straight week of cash. They have had just two months of net outflows in the past year, according to ICI.
Bonds have become the choice asset for U.S. fund investors over the past year despite a rally in stocks. Bonds have their own risks, as the Federal Reserve hikes interest rates and eyes potential plans this year to trim its $4.5 trillion of bonds and other assets. Rising interest rates erode bond prices.
(Reporting by Trevor Hunnicutt; Editing by Meredith Mazzilli)