U.S.-based investment-grade corporate bond funds see 14th week of inflows

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(Reuters) – Investors gravitated toward the higher-quality spectrum of the credit markets this week, as U.S.-based investment-grade corporate bond funds attracted about $374.5 million in net cash, their 14th consecutive week of inflows.

According to Refinitiv’s Lipper research data on Thursday, investors sent roughly $16 billion in net cash to U.S. money-market funds for the week ended Wednesday, following their previous week’s inflows of $4.26 billion.

U.S.-based equity mutual funds, however, had another rough week.

Investors pulled $5.5 billion from U.S.-based equity mutual funds in the week ended Wednesday, Lipper data show, while equity exchange-traded funds garnered $3.7 billion.

“Despite the S&P 500 setting three record closes during the fund-flows week, investors remained on the equity sidelines after learning about disappointing Q1 revenue growth from stalwart Alphabet,” said Tom Roseen, head of research services at Lipper.

“There was a split once again between mom-and-pop investors and authorized participants. Equity mutual funds witnessed outflows of $5.5 billion, while equity ETFs took in $3.7 billion during the fund flows week.”

U.S.-based taxable exchange-traded funds posted cash withdrawals for the week, with investors withdrawing $700 million in net cash.

“While investors were keeping a keen eye on the FOMC (Federal Open Market Committee) meeting, which concluded on Wednesday on a more hawkish note than some anticipated, taxable-fixed income mutual funds took in small amounts of net new money – $348 million-plus, with ETF investors … withdrawing $700 million,” Roseen said.

“Interestingly, though, both investors types were net purchasers of municipal bond funds, injecting $877 million into conventional open-end funds and $314 million for ETFs, respectively,” Roseen said. “For the week, the average municipal bond fund returned 0.51 percent.”

Reporting by Jennifer Ablan; Editing by James Dalgleish

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