U.S.-based mutual funds get most new cash in 37 weeks: ICI

By Trevor Hunnicutt

NEW YORK (Reuters) - U.S.-based mutual funds raked in the most cash since June in the latest week, Investment Company Institute (ICI) data showed on Wednesday, as the outlook for U.S. bonds improved.

About $8.8 billion flowed into U.S. funds during the week ended March 9 after investors spent the first part of the year ducking risks. The net inflow was the largest in 37 weeks, ICI said.

Investors pulled $111 billion from mutual funds over the 12 weeks ended Feb. 17, the fund trade group said. The figures exclude money-market funds often used by investors stockpiling cash.

Since then, investors have been mostly adding money to U.S. bond funds, despite the risk of declining corporate credit and rising interest rates, and international stocks that could waver if economic growth disappoints.

"Investors were willing to take on risk," Todd Rosenbluth, who directs mutual-fund research at S&P Global Market Intelligence, said in an interview. "They added more money to investment-grade and high-yield bonds than government bonds as signs of economic growth improved."

Bond funds attracted a net $5.9 billion during the latest weekly period as high-yield funds recorded $1.7 billion in inflows, and investment-grade bond funds took in $2.7 billion. Taxable government bond funds drew in $536 million, the least since January, ICI said.

Global stock funds took in $1.7 billion, while funds focused on U.S. shares posted $235 million in withdrawals. That made 10 weeks in a row of net inflows for international-stock funds, ICI said.

"The preference for international equities continued, aided we think by confidence that the European Central Bank would help stimulate the local economies," Rosenbluth said.

The large inflows last summer were boosted artificially by the conversion of other investment products into mutual funds, ICI said at the time.

Excluding the week ended June 24, 2015, inflows to the mutual funds in the latest week were the largest since Jan. 28, 2015, when the ECB launched a $1 trillion government bond-buying program.

On Thursday, the bank said it was expanding that asset-buying policy, known as quantitative easing.

(Reporting by Trevor Hunnicutt; Editing by Richard Chang)

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