U.S. fund investors favor stocks, emerging markets in week: Lipper

By Trevor Hunnicutt

NEW YORK (Reuters) – Investors overcame fears over a potential trade war and added money to domestic stocks and emerging markets in the latest week, Lipper data showed on Thursday.

U.S.-based stock mutual funds and exchange-traded funds (ETFs) netted $2 billion in the seven days through Wednesday, the most cash in four weeks, according to the data.

Emerging markets stock funds pulled in $968 million and debt funds focused on that region attracted $250 million, the most in six weeks, Lipper said.

Investors’ apparent willingness to take on risk comes even as markets wrestle with ongoing U.S. trade negotiations with Canada and unresolved trade issues with China. Yet, during the week, the U.S. also struck a deal in principle over trade with Mexico.

Emerging markets are being hit by concerns over trade and the consequences of a strong dollar that have helped to weaken countries from Turkey to Argentina, which owe debt that is denominated in dollars.

Tom Roseen, head of research services for Thomson Reuters’ Lipper unit, said the U.S. stock market has three things going for it: an accommodative Federal Reserve, strong corporate profits and a relatively optimistic outlook on the potential for trade conflict to be resolved.

Each of those factors is making investors a bit more willing to buy the dip in emerging markets.

“We looked at China as being the engine of growth and I think we’ll see them return to being the engine of growth,” said Roseen.

“If these trade issues get resolved it could be a boon for the whole world.”

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