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Cash flows accelerate into U.S.-based bond funds -ICI

NEW YORK, Sept 20 (Reuters) - A tide of cash swept into U.S.-based taxable-bond funds for a 41st straight week, with inflows for the funds swelling to $8.7 billion, from $5.9 billion the week prior, Investment Company Institute (ICI) data showed on Wednesday. U.S. fund investors continue to favor debt over equity as the Federal Reserve has sketched out plans to shift from the ultra-easy monetary policy it adopted during the 2007-2009 global financial crisis. The U.S. central bank is widely expected to announce plans to pare its own bond holdings on Wednesday. Municipal bond mutual funds and exchange-traded funds (ETFs) pulled in $908 million in the week ended Sept. 13, up from $527 million the week prior, according to the trade group's data. Overall, investors handed $9.6 billion to U.S.-based bond funds, the most since July. "Fed policy is likely to affect all risky assets, not just bonds or Treasuries," said Matthew Forester, chief investment officer for Lockwood Advisors Inc, a part of the Bank of New York Mellon Corp. "Investor appetites for risk reflect serious concerns about fiscal policy, geopolitical and political stability. Also, perhaps most importantly, money is fungible. If other global central banks are still pursuing loose policy while the Fed tightens, that will still provide support to U.S. and global markets." Stock fund flows showed $5 billion of inflows, from $231 million in outflows the week prior, as cash ebbed back into the domestic equity market. Those domestic funds pulled in $2.1 billion, adding only a 3rd week of inflows in the last 10 weeks, ICI said. Many equity indexes are perched at or near record highs. World stock funds attracted $2.9 billion, according to ICI, advancing an inflow streak that is unbroken this year. The following table shows estimated ICI flows for mutual funds and ETFs (all figures in millions of dollars):

9/13 9/6 8/30 8/23 8/16/2017 Equity 5,003 -231 8,191 -1,808 -9,170 -Domestic 2,096 -2,937 3,684 -4,687 -11,276 -World 2,907 2,706 4,507 2,880 2,106 Hybrid -903 -1,184 -928 -1,066 -1,771 Bond 9,583 6,453 5,354 5,314 4,829 -Taxable 8,674 5,926 4,601 4,074 3,822 -Municipal 908 527 753 1,240 1,007 Commodity 125 980 982 604 881 Total 13,808 6,018 13,599 3,045 -5,230

(Reporting by Trevor Hunnicutt; Editing by Nick Zieminski)