Investors pulled $1.2 billion from US-based stock funds in the week ended Jan. 27, Lipper data showed Thursday, as optimistic bets on energy firms and on Europe and Japan were overwhelmed by a fourth straight week of caution on domestic stocks.
The US Federal Reserve’s more cautious outlook this week on global economic and financial developments revived some safe-haven bids for US Treasury debt funds and money-market funds, Reuters reported.
Investors pumped $3.8 billion into US Treasury debt funds, for a seventh straight week of inflows and pushing bond funds to their first week of inflows of the year, Lipper data showed.
US-based taxable-bond funds took in $3.3 billion during the week. Relatively low-risk money-market funds took in $13.9 billion during the week, their largest inflows this year, Lipper said. “Some investors have been running for cover,” said Lipper analyst Tom Roseen. “It’s cautiousness, period.”
The US central bank held rates unchanged, but nodded to the economic uncertainty that has roiled markets since the year began. Yet investors took new hope in stimulus by central bankers abroad. US-based funds that focus on European and Japanese stocks broke a streak of outflows, attracting a combined $1.1 billion in net new money.
Some investors were willing to bet the slide in oil prices is over. Funds invested in energy commodities, including oil futures, took in $407 million, for a third straight week of inflows. Energy-sector stock funds took in $420 million during the week, Lipper data showed. High-yield junk bond funds, which have become a stage for investors’ anxieties over potential contagion from the oil rout, attracted $883 million during the week, the first time this year the funds have taken in net new cash, according to Lipper.
The Lipper fund flow data is compiled from reports issued by US-domiciled mutual funds and exchange-traded funds.
Analysts from TDS Telecom, expect the US dollar to remain on a firm footing, but they have tempered its bullishness as a consequence of slower growth and uncertainty over the Fed’s policy path.”
The US economy has hit another soft-patch, with the recovery ending the year on weaker footing. The slowdown in growth momentum, however, should prove temporary, driven in part by the longer than expected inventory correction and intense global headwinds. Nevertheless, TD expects the favorable underlying domestic backdrop to reassert itself over the coming months, pushing Q1 GDP growth back above the 2.0% trend pace.
