Fund investors piled into US-based equity exchange-traded funds in the week ended Wednesday, following six straight weeks of withdrawals, Lipper data showed on Thursday, as investors geared up for strong quarterly earnings. The flows showed that investors were "putting money back into play," said Pat Keon, senior research analyst at Thomson Reuters Lipper.
ETF investors put $4.7 billion of the $5 billion in net inflows to US-based equity ETFs into funds focused on domestic stocks. The S&P 500 rose 1.5 percent from July 11 to 18 as earnings trickled in from major banks, including JPMorgan Chase & Co, as well as railroad CSX Corp and airline United Continental. Results were mixed, but investors are still expecting market-leading technology firms and several other sectors to deliver double-digit profit growth over the year prior, according to Credit Suisse data.
Elevated risk appetite was also evident in withdrawals from US-based money-market funds, which posted $6.5 billion in outflows, after $21 billion in inflows the week prior. Investors use money-market funds to temporarily park cash. In the coming weeks, companies will have to live up to strong expectations for results and investors will contend with continuing disputes between the US and its major trading partners.
Uncertainty over trade has helped demand for some lower-risk sources of yield. US-based corporate investment grade bond funds brought in cash for the 19th straight week with $2 billion in deposits. Municipal bond funds took in $1.2 billion, the most cash since April 2017.