U.S. Weekly FundFlows Insight Report: Equity Fund Investors Take ‘19 Profits Off The Table, Embrace Fixed Income Funds

For the third week running, investors were overall net purchasers of fund assets (including those of conventional funds and ETFs), injecting $10.2 billion for Lipper’s fund-flows week ended January 8, 2020. Fund investors were net purchasers of taxable fixed income funds (+$12.2 billion), money market funds (+$4.3 billion), and municipal bond funds (+$2.9 billion). However, once again, they were net redeemers of equity funds (-$9.2 billion) this week.

Market Wrap-Up

For the fund-flows week ended January 8, 2020, investors warmed to the U.S./China trade discussions, news that the People’s Bank of China (PBOC) lowered its reserve requirement for commercial banks, and the Federal Reserve Board’s general economic optimism, while keeping a keen eye on developments between the U.S. and Iran. During the fund-flows week, all three broadly followed U.S. indices set new record closes at various times. The NASDAQ Composite Price Only Index (+1.75%) posted the strongest returns of the broadly followed U.S. indices for the fund-flows week, followed by the Dow Jones Industrial Average Price Only Index (+0.72%), while the Russell 2000 Price Only Index (-0.29%) suffered the only negative returns. Overseas, the Shanghai Composite Price Only Index (+0.89%) posted the only plus-side returns of the often-followed broad-based global indices, while the Nikkei 225 Price Only Index (-1.87%) suffered the largest declines.

On Thursday, January 2, all three major U.S. stock market indices set new record closes on the day as investors cheered the PBOC lowering its reserve requirements by 0.5 percentage points for commercial banks, China’s manufacturing sector grew for the fifth straight month, and the U.S. first-time jobless applications declined in the week ended December 28. However, on Friday, January 3, the Dow logged its largest decline in four weeks after the Institute of Supply Management (ISM) reported a decline in its manufacturing purchasing managers index, which fell to 47.2%—its lowest since June 2009—and the U.S. military killed a top Iranian general in an airstrike, sending oil, gold, and U.S. Treasury instruments higher. Oil settled up 3.1% on the day to close at $63.05 per barrel.

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