August 2, 2017 / 7:16 PM / 3 years ago

U.S. commodity funds post biggest outflows of 2017 -ICI

    By Trevor Hunnicutt
    NEW YORK, Aug 2 (Reuters) - U.S.-based commodities funds
posted the largest withdrawals of 2017, bleeding $1.2 billion
during the latest week and sending a contrarian signal to rising
oil and gold markets, Investment Company Institute (ICI) data
showed on Wednesday.
    Crude oil futures and gold have both generated
more than 4 percent returns apiece over the last month, but
withdrawals accelerated for U.S. funds heavily invested in those
    Kristina Hooper, global market strategist at Invesco Ltd,
said the selling could reflect concerns that "with oil in
particular there might not be control over production."
    As part of a deal with Russia and other non-members, the
Organization of the Petroleum Exporting Countries is reducing
output by about 1.2 million barrels a day from Jan. 1, 2017
until March next year. Officials are meeting in Abu Dhabi
starting on Monday to discuss compliance.
    Recent gains aside, oil has struggled to regain its peaks
from before a vicious sell-off in 2014.
    "Oil has been such a wild card," said Hooper.
    Gold prices, meanwhile, are gaining. A declining dollar
helps gold by making it cheaper to foreign buyers and by
reducing spending power and increasing inflationary pressures
within the United States. Gold is often seen as a hedge against
inflation. Low bond yields also support gold, which competes
with bonds for investor demand and pays no yield.
    "It's a supportive environment, going forward, for gold, but
we've seen some profit-taking," said Maxwell Gold, a director of
investment strategy at ETF Securities Ltd. He said physically
backed gold ETFs sold 68 metric tons of the metal in July.
    Domestic stock funds in the United States netted cash for
the first time in six weeks, attracting $1.1 billion during the
week as company earnings supported further price gains this
year. Apple Inc on Tuesday delivered strong fiscal
third-quarter earnings, the latest in a string of well-received
    International stock funds and taxable bond funds, which have
been popular this year with U.S. investors, added a 34th
straight week of inflows. But in both instances the trend
    World equity fund flows weakened to $3.9 billion from $7.5
billion the week prior. Taxable bond fund flows declined to $5.6
billion from $12.8 billion the week before.
    The following table shows estimated ICI flows for mutual
funds and exchange-traded funds (all figures in millions of
               7/26     7/19    7/12      7/5  6/28/2017
 Equity       4,961    2,976   3,021   -6,478      2,143
 -Domestic    1,056   -4,542  -2,118  -11,551     -4,571
 -World       3,905    7,518   5,139    5,073      6,714
 Hybrid        -350     -664    -688     -481       -614
 Bond         6,344   13,609   4,780    5,824      5,404
 -Taxable     5,621   12,809   4,438    6,072      4,460
 -Municipal     724      801     341     -248        943
 Commodity   -1,168   -1,014    -249     -583        394
 Total        9,788   14,908   6,864   -1,719      7,327
 (Reporting by Trevor Hunnicutt)
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