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U.S. fund investors pull nearly $10 billion from stocks in week: Lipper

Published 06/15/2018, 08:11 AM
© Reuters.  U.S. fund investors pull nearly $10 billion from stocks in week: Lipper
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By Trevor Hunnicutt

NEW YORK (Reuters) - U.S. fund investors snatched $9.7 billion out of stocks during the latest week, marking the largest withdrawals since early April, according to Lipper data on Thursday.

The withdrawals put more pressure on emerging markets as well. The research service's data covers the seven days through June 13, closing out on the same day that the U.S. Federal Reserve raised interest rates.

The Fed on Wednesday also dropped its pledge to keep rates low enough to stimulate the economy "for some time," and signaled a slightly faster pace of rate increases in the coming months, with two additional hikes expected by the end of this year, compared to one previously.

U.S. financial sector funds seen as benefiting from higher rates pulled in $793 million, the most since February.

Tensions between the United States and its trading partners threaten to shake the market's calm.

U.S. President Trump has made up his mind to impose "pretty significant" tariffs on Chinese goods, an administration official said on Thursday, as Beijing warned that it was ready to respond if Washington chose to ratchet up trade tensions.

"We had strong returns this week, but the mutual fund and [exchange-traded fund] investors weren't buying it," said Tom Roseen, head of research services for Thomson Reuters' Lipper unit.

"I don't think it's concerning at all but it tells us investors were taking some of that hard-won profit off the table."

MSCI's emerging markets index is down nearly 3 percent this year, while the S&P 500 in the United States has delivered a positive 5 percent total return.

Dollar strength and tighter monetary policy have highlighted weaknesses in economies from Brazil to Argentina and Turkey, including questions about whether they can honor debts denominated in dollars that are growing harder to come by.

U.S.-based funds that invest primarily in emerging market stocks are on course for a second straight month of withdrawals and first quarter of outflows since 2016. More than $1.1 billion rolled out of the products during the latest week.

"Some people are concerned with global growth, but the Fed does have room as far as the U.S. economy goes," said Roseen.

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