U.S.-based taxable-bond funds took in $7 billion during the latest week, the largest weekly intake since July, adding to an already strong year for debt against the backdrop of a rate-hiking cycle, Lipper data showed on Thursday.
NEW YORK (Reuters) – U.S.-based taxable-bond funds took in $7 billion during the latest week, the largest weekly intake since July, adding to an already strong year for debt against the backdrop of a rate-hiking cycle, Lipper data showed on Thursday.
Even in a week with big inflows for technology stocks, U.S. fund investors continue to favor debt over equity. The Federal Reserve on Wednesday announced plans to reduce its own bond holdings, marking a historic shift from the ultra-easy monetary policy it had adopted since the 2007-2009 global financial crisis.
Taxable-bond mutual funds and exchange-traded funds (ETFs) have now brought in nearly $219 billion this year in the United States, according to Thomson Reuters&rsquo- Lipper research unit.
But that is not a bubble, said Matthew Forester, chief investment officer for Lockwood Advisors Inc., part of the Bank of New York Mellon Corp.
&ldquo-Market prices should already reflect Fed decisions,&rdquo- said Forester. &ldquo-Debt, demographics and technology-driven disinflation all work to suppress long-term rates.&rdquo-
Bond prices rise as rates fall.
Financial sector funds, which are seen profiting from higher rates, also pulled in their largest week of inflows since July, at $530 million. Real estate sector funds, by contrast, posted $407 million in outflows during the week ended Sept. 20, their largest withdrawals since June.
U.S.-based stock funds pulled in $803 million, according to Lipper.
TECH STOCKS
U.S.-based technology sector stock funds pulled in $1.1 billion, their largest week of inflows since September 2006.
The VanEck Vectors Semiconductor ETF attracted $420 million during the week, the third most on record for the ETF.
The iShares North American Tech-Software ETF pulled in $176 million, while the Technology Select Sector SPDR Fund gathered $138 million.
Nvidia Corp shares hit a record high this month as analysts noted the semiconductor firm&rsquo-s progress in artificial intelligence.
However, they took a bit of a hit on Thursday on reports that Tesla Inc was working with Advanced Micro Devices Inc to develop a chip for self-driving cars. One of AMD&rsquo-s chipmaking partners later denied that report.
Apple Inc, the biggest holding in the broad tech sector ETF, last week rolled out its iPhone X, a glass and stainless steel device with an edge-to-edge display, along with a smartwatch. However, mixed reviews for the new watch weighed on the company&rsquo-s shares.
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