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Lipper: Fund Investors Yank $8.8 Billion From Bonds

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Friday, 02 November 2018 08:00 AM

U.S. fund investors' patience with debt is starting to wear thin as monetary policy tightens, with Lipper data on Thursday showing the largest weekly withdrawals from taxable-bond funds since February.

Investors clawed back nearly $8.8 billion from U.S.-based bond funds, with the largest withdrawals of the year recorded from products invested in municipal debt, investment-grade corporates and leveraged loans, according to the research service.

The data covers estimated activity in mutual funds and exchange-traded funds during the week ended Oct. 31.

Withdrawals spanned fixed-income categories. Municipal bonds are issued by U.S. cities and states, but offer holders tax advantages. Investment-grade bonds come from corporations with relatively stronger balance sheets while leveraged loans often come from heavily-indebted companies.

Short-duration Treasury funds, ostensibly low risk as rates rise, attracted $2 billion. "It was definitely a risk-off strategy," said Pat Keon, senior research analyst at Lipper. "It was pretty much across the board."

U.S. Federal Reserve policymakers seem on course to deliver their fourth rate hike of the year in December - the most in any calendar year since 2006 - while letting its large holdings of bonds accumulated during the financial crisis roll off.

The U.S. government and optimistic corporate executives continue to borrow even as investors are watching the economy closely for signs it is peaking. Stock fund investors, in the midst of third-quarter earnings reports, took a rosier view.

Those funds attracted $2.4 billion in a second straight week of positive sales. But technology sector stock funds posted $1.4 billion in withdrawals, the most pulled from those products since February 2015, as market-leading tech names dragged equity indexes lower.

© 2018 Thomson/Reuters. All rights reserved.

   
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U.S. fund investors' patience with debt is starting to wear thin as monetary policy tightens, with Lipper data on Thursday showing the largest weekly withdrawals from taxable-bond funds since February.
fund, investors, billion, bonds
269
2018-00-02
Friday, 02 November 2018 08:00 AM
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