Investors pull out of US equity funds

Dec 10, 2018
Funds invested in US equities suffer $3.5 bn of outflows

Investors pulled out of US equity and corporate bond funds in the early part of December, favoring the safety of US government debt given trade uncertainties and the outlook for global growth.

Funds invested in US equities saw $3.5 bn of outflows up to December 5, nearly reversing inflows into such funds this year, according to data from US fund data analytics company EPFR Global. Investors also withdrew $1.8 bn from US bond funds, marking a fourth straight week of outflows.

Equity markets were shaken last week by concerns that a trade truce between the US and China is in fact breaking down, resulting in the S&P 500 falling 1.5 percent. Fears were heightened by the arrest in Canada of Meng Wanzhou, chief financial officer of Chinese tech company Huawei, in response to a US extradition request.

Investors appear to have sought the perceived safety of treasuries, adding a combined $1.4 bn to funds invested in long-term and short-term US government debt, according to the data.

Investors have pulled back on the prospect of further interest rate increases from the Federal Reserve amid expectations of an economic slowdown next year.

The benchmark 10-year treasury yield has fallen 34 basis points from its peak last month, indicating that the bond market sees a slowdown coming.

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