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Record highs in U.S. stock market not enough to attract fund investors

David Randall

NEW YORK, July 31 (Reuters) - Investors retreated from the U.S. stock market last week despite the benchmark S&P 500 reaching new record highs, pulling nearly $9.1 billion from mutual funds and exchange-traded funds that hold domestic stocks, according to data released Wednesday by the Investment Company Institute. The move away from the U.S. market came on the heels of $1.1 billon in inflows the week before, continuing a pattern in which the outsized gains in S&P 500 have been unable to attract investors en masse. The benchmark index is up more than 20% for the year to date, thanks in part to expectations of at least one equity-friendly interest rate cut by the Federal Reserve this year. Over the same time, investors have pulled nearly $67 billion out of domestic stock funds. Instead, investors continued to pile into fixed income by sending $10.4 billion into taxable and municipal bond funds, extending a streak of positive inflows over every full week of the year that has brought more than $255 billion into the category. World stock funds, meanwhile, continued a 9-week losing streak by dropping slightly more than $1 billion in assets. Investors have pulled approximately $20.5 billion from the category since the start of the year.

The following is a broad breakdown of the flows for the week, including mutual funds and exchange-traded funds:

7/24/19 7/17/19 7/10/19 7/2/19 6/26/19Equity -10,060 -719 1,377 -28,756 -8,827Domestic -9,045 1,113 2,382 -25,153 -5,417World -1,015 -1,831 -1,005 -3,603 -3,410Hybrid -776 -170 -46 -560 -1,947Bond 10,407 11,100 9,858 10,437 10,528Taxable 7,696 8,567 7,694 8,811 8,011Municipal 2,711 2,533 2,164 1,626 2,517Commodity 1,196 237 208 143 1,703Total 767 10,448 11,397 -18,735 1,456

(Reporting by David Randall; Editing by Jennifer Ablan and Nick Zieminski)