(Reuters) – Investors put money to work in corporate credit markets in the latest week, with U.S.-based investment-grade corporate bond funds attracting about $3.47 billion in the week ended on Wednesday, the group’s 11th consecutive weekly inflow, according to Refinitiv’s Lipper research service data on Thursday.
Appetite returned for their equity counterparts. U.S.-based equity funds attracted over $4.27 billion in the week ended on Wednesday, reversing the previous two weeks of cash withdrawals totaling about $15 billion.
Tom Roseen, head of research services at Lipper, noted that while equity exchange-traded fund (ETF) flows remained solidly positive at over $10.3 billion, “conventional equity funds investors remained net redeemers for the week, pulling out $6 billion for the week.”
Investors in exchange-traded funds are thought to represent the institutional investor, including hedge funds. Mutual funds are thought to represent retail investors. “Despite plus-side returns for most of the broadly followed U.S. indices, investors remained cautious after learning February factory orders fell more than economists expected and ahead of the start of the Q1 2019 earnings reporting period,” Roseen added.
Fixed-income funds enjoyed another week of demand, thanks to Federal Reserve officials’ pledge to be patient in raising interest rates this year.
U.S.-based taxable bond funds attracted over $4.8 billion in the week ended Wednesday, extending their weekly inflow streak since March. U.S.-based high-yield bond funds attracted about $655 million for the week ended Wednesday, their fifth consecutive week of inflows, Lipper said.
“The Federal Reserve’s dovish tone in its March meeting minutes along with tame wage growth numbers and news that the IMF lowered its outlook for global economic growth to 3.3% for 2019 were boons for longer-dated bond securities,” Roseen said. “Investors were betting that neither the Fed nor other central banks were likely to hike rates anytime soon.”
Reporting by Jennifer Ablan; Editing by James Dalgleish