(New throughout, adds details, comments from head of research services at Thomson Reuters Lipper, table) By Trevor Hunnicutt NEW YORK, Dec 14 (Reuters) - Investors pulled $16.2 billion from U.S.-based equity funds during the latest week, according to Lipper on Thursday, marking the largest withdrawals since December 2016.
Taxable-bond mutual funds and exchange-traded funds recorded $1.2 billion in outflows, with U.S.-based high-yield junk bond funds posting outflows of $922 million in the latest week ended Wednesday. On the other end of the spectrum, safer U.S.-based money-market funds posted more than $30 billion of inflows, the research service said. U.S.-based government-Treasury funds also saw healthy inflows for the week, as investors poured over $1.15 billion into the sector, Lipper said.
Tom Roseen, head of research services at Thomson Reuters Lipper, noted that the broad-based indices generally rallied to new highs during the fund-flow week, with the Dow Jones Industrial Average closing the flows week up 1.84 percent, while the S&P 500 Index rose 1.28 percent.
"Nonetheless, fund investors appeared to be content sitting on the sidelines, taking some of their equity-related winnings off the table ahead of the holiday season," Roseen said.
Year-to-date, the Dow and the NASDAQ Composite indices are up 24.40 percent and 27.73 percent, respectively.
Roseen said tax selling was also at play during the outflow week for equity funds. "It makes sense that investors might be making strategic moves ahead of the implementation of the FIFO rule (first-in-first-out tax treatment on the sale of securities) suggested," he said. "In a hugely up market like we have seen, it makes sense to use your losers to help offset realized gains. So there is probably some take loss-selling going on." For the 38th consecutive week, conventional fund (ex-Exchange Traded Fund) investors were net redeemers of equity funds, redeeming $19.3 billion for the flows week - its fourth largest weekly net outflows on record, according to Lipper data.
Domestic equity funds (ex-ETFs) posted outflows of more than $18.5 billion - their largest weekly withdrawals on record - witnessed their 50th week of net outflows while chalking up a 1.20 percent return on average, Roseen said. Meanwhile, their non-domestic equity fund counterparts posted a 1.31 percent return on average, but witnessed net outflows of $779 million in the weekly period, their group's third straight week of withdrawals, Roseen said.
"Interestingly, six of the seven largest weekly net redemptions for equity funds, ex ETFs, occurred in December," Roseen said. "This appears to be a theme." The following is a breakdown of the flows for the week, including mutual funds and ETFs: Sector Flow Chg Pct of Assets Count ($ blns) Assets ($ blns) All Equity Funds -16.209 -0.25 6,428.901 12,165 Domestic Equities -17.337 -0.40 4,330.645 8,681 Non-Domestic 1.127 0.05 2,098.256 3,484 Equities All Taxable Bond -1.187 -0.05 2,620.178 6,060 Funds All Money Market 30.656 1.16 2,672.637 1,030 Funds All Municipal Bond 0.217 0.05 401.346 1,481 Funds (Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and David Gregorio)