May 26, 2017

Investors Continue to Favor Nondomestic Equity Funds During the Week

by Tom Roseen

In the aftermath of a large one-day politically-driven market decline in the prior week, equity mutual fund investors continued to duck for cover during Thomson Reuters Lipper’s fund-flows week ended May 24, 2017. That was in spite of the S&P 500 and the Dow Jones Industrial Average posting plus-side returns for five consecutive days (their longest run since February this year).

Fund investors appeared to shrug off news of improving initial jobless claims, a jump in the Philadelphia Federal Reserve manufacturing index, and strengthening oil prices during the week. For the first week in three investors were net sellers of fund assets (including those of conventional funds and exchange-traded funds [ETFs]), withdrawing $5.5 billion, with equity funds witnessing net redemptions of $10.1 billion for the week (their second largest weekly net redemptions in 2017).

Whether being soured by the continued political drama in the U.S. or encouraged by the news that the Eurozone purchasing managers index came in at a six-month high (showing the economy was gaining strength), fund investors continued to pad the coffers of nondomestic equity funds (which posted a 0.86% return for the week), injecting a net $1.0 billion into the subgroup for its tenth consecutive week of net inflows. However, fund investors once again were net redeemers of domestic equity funds (despite their posting a return of +1.91%), which suffered their fourth consecutive week of net outflows, this time to the tune of $11.0 billion.

Year to date, domestic equity fund flows remained in the plus column, attracting $9.7 billion net through the week ended May 24, while their nondomestic brethren attracted some $68.3 billion.

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