Investors retreat from U.S. stock funds as trade war expands

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NEW YORK (Reuters) – Investors pulled approximately $4.7 billion out of mutual funds and exchange-traded funds that hold U.S. stocks last week as concerns about escalating trade wars weighed on equity markets worldwide, according to data released Wednesday by the Investment Company Institute.

The retreat from domestic stocks came as the benchmark SP 500 fell three out of the four trading days of the holiday-shortened week, and added to a months-long move away from the U.S. market despite gains in major indexes for the year to date. Since January, investors have pulled a net of $40.3 billion out of U.S. stocks. The benchmark SP 500 is up 12% over the same time.

World stocks dropped last week after U.S. President Donald Trump unexpectedly announced new trade tariffs on Mexican goods to stem illegal immigration, while the U.S. and China continued to be at an impasse in talks over ending the trade war between the world’s two largest economies.

Taxable and municipal bond funds continued to pull in new assets, bringing in a net of approximately $3 billion last week. For the year to date, bond funds have grabbed slightly more than $177 billion in inflows.

World stock funds, meanwhile, were little changed for a second straight week, losing $302 million in net assets after gaining $105 million the week before. For the year to date, world stock funds have lost $5.5 billion in net investor assets.

Reporting by David Randall; Editing by Jennifer Ablan and Susan Thomas

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