By Trevor Hunnicutt
NEW YORK (Reuters) - Stock mutual funds based in the United States posted $2.1 billion in withdrawals last week for the second consecutive week, Investment Company Institute (ICI) data showed on Wednesday, as U.S. equities broke a five-week winning streak.
The stock funds posted outflows after attacks in Belgium weighed on investor sentiment. Returns were also held back by a stronger U.S. dollar and comments by U.S. Federal Reserve policymakers suggesting the potential for an April hike in benchmark interest rates.
U.S.-based mutual funds that invest mainly in companies based within the country posted $2 billion in outflows in the week that ended March 23.
Outflows from international stock funds moderated to $108 million in the latest week, compared with $558 million the previous week, as investors took less money from emerging-markets funds. U.S.-based funds invested in those riskier markets posted just $79 million in outflows during the week, compared with $1 billion the previous week.
Investors ended an 11-week streak of inflows that had brought a total $22 billion to funds invested in developed markets outside the United States, like Europe and Japan, during the week. Those funds posted $29 million in outflows, according to ICI.
"Investors continued to favor bonds funds over equity funds, with municipal bonds and investment-grade taxable bonds dominating," said Todd Rosenbluth, who directs mutual-fund research at S&P Global Market Intelligence. "Within equities, the recent willingness to take on risk through small and mid-cap U.S. funds has disappeared, causing outflows."
Bond funds enjoyed another strong week, taking in $4.7 billion. Investment-grade bond funds attracted $1.6 billion, while lower-grade high-yield funds took in $420 million, ICI said. Prices on corporate debt have improved in recent weeks as fears that some energy companies would default abated and oil prices improved.
Municipal-bond funds took in $1.6 billion, their 25th straight week of inflows. Investors added $683 million to taxable-government bond funds, the 15th straight week of net new cash for those safe-haven funds, according to ICI.
The following table shows estimated ICI flows for the past five weeks (all figures in millions of dollars):
3/23 3/16 3/9 3/2 2/24/2016
Total equity -2,144 -2,087 1,472 45 4,441
-Domestic -2,035 -1,528 -240 -2,189 2,090
-World -108 -558 1,712 2,234 2,350
Hybrid 1,774 225 1,406 987 1,601
Total bond 4,673 4,921 5,939 4,100 -99
-Taxable 3,087 3,858 4,906 3,166 -1,120
-Municipal 1,586 1,063 1,032 934 1,020
Total 4,303 3,060 8,816 5,132 5,942