×

Fund investors wary of greed amid U.S. stock rally

NEW YORK, Oct 18 (Reuters) - U.S. fund investors stockpiled more cash abroad and in bonds during the latest week, Investment Company Institute data showed on Wednesday, resisting the temptation to chase further returns from a bull market that has lasted the better part of a decade. Funds invested primarily in stocks abroad and those holding taxable bonds reeled in cash for a 45th consecutive week, the ICI trade group said. Yardeni Research Inc Chief Investment Strategist Ed Yardeni said gains in U.S. stocks might still lure investors eager to profit, but that could push prices beyond reasonable levels and leave them susceptible to cratering in a so-called melt-up. "We've had no meaningful correction since the beginning of 2016," Yardeni said. "The market just doesn't seem to be able to go down so the path of least resistance has been up, and that's in the face of a lot of turmoil in Washington and geopolitical issues that have largely been ignored." The S&P 500 has delivered more than a 16 percent return this year, including dividends, and more than 350 percent since its March 2009 lows. Lately, though, easily won gains in U.S. stocks have led to a bit more fear than greed among fund investors. U.S.-based bond funds have brought in more than $2 for every $1 gathered by equity funds this year, according to data from Thomson Reuters' Lipper research unit. Domestic stock funds posted $1.6 billion in withdrawals during the week ended Oct. 11, with $3.1 billion in exchange-traded fund (ETF) inflows offset by mutual fund outflows, according to ICI. World stock funds attracted $5 billion and debt funds pulled in $9.1 billion during the latest week, according to the ICI. The data includes funds based in the United States. The following table shows estimated ICI flows for mutual funds and ETFs (all figures in millions of dollars):

10/11 10/4 9/27 9/20 9/13/2017 Equity 3,407 -3,465 -6,792 1,006 5,003 Domestic -1,623 -5,878 -9,353 -2,137 2,097 World 5,030 2,413 2,561 3,143 2,907 Hybrid -497 -1,295 -1,077 901 -903 Bond 9,137 12,397 6,690 11,083 9,538 Taxable 8,663 12,134 5,947 10,171 8,630 Municipal 473 263 743 911 908 Commodity 265 -357 861 -134 125 Total 12,311 7,279 -317 12,856 13,763

(Reporting by Trevor Hunnicutt; Editing by Tom Brown)