(Adds details on funds, analyst quote, table) NEW YORK, Nov 8 (Reuters) - Fund investors failed to be wowed by U.S. elections, pulling $8.5 billion from U.S.-based stock funds during the latest week, Lipper data showed on Thursday.
The largest withdrawals from U.S. stock funds in three weeks came even as optimism lifted stocks the day after Democrats won control over the House of Representatives on Tuesday, leaving Republicans in control of the Senate and White House. Such a divided government may do little to shake up a strong economy, some investors said.
But fund investors' overwhelming selling in the days prior to the election dominated mutual funds and exchange-traded fund sales data during the week ended Wednesday. Investors were spooked by rocky October trading that temporarily erased the S&P 500's gains for the year and some saw fit to take risk off the table on days when markets gained in more recent days.
"Overall people were concerned about what the economy could be doing going forward," said Tom Roseen, head of research services for Refinitiv's Lipper research service. "People are saying the market's still pretty dear and are hesitant to jump back in." Economic data and corporate earnings remain strong, creating the possibility of a "Santa Claus" rally as 2018 comes to a close, Roseen said. Quarterly S&P 500 profits are up 27.7 percent over the year prior, the best result since 2010, according to Refinitiv IBES data.
Nonetheless investors continue to crowd in the relative safety of short-term Treasuries less affected than stocks by growth and less affected than longer-term bonds by interest rates, which could rise further under a Federal Reserve worried about inflation pressures in a strong economy.
Treasuries funds took in $3.7 billion during the week despite falling prices, the most since January 2016, while demand for short-term government bonds was at a 2-1/2-year high of $2.4 billion.
Rates eased after the election as investors doubted a divided government would further cut taxes, keeping deficits spending somewhat in check, and as a relief rally in equities reduced safe-haven demand.
That helped U.S.-based funds invested in emerging market stocks collect $1.2 billion, the most cash since April. Emerging markets have been hobbled by rate hikes that have attracted money away from their countries, made dollars more precious and consequentially made repaying greenback-denominated debt harder.
The following is a breakdown of the flows for the week, including mutual funds and ETFs: Sector Flow Chg Pct of Assets Count ($ blns) Assets ($ blns) All Equity Funds -8.497 -0.12 7,235.873 12,196 -Domestic Equities -8.683 -0.17 5,181.814 8,656 -Non-Domestic Equities 0.186 0.01 2,054.059 3,540 All Taxable Bond Funds 4.124 0.15 2,781.508 6,037 All Money Market Funds 23.924 0.87 2,778.994 1,029 All Municipal Bond Funds -0.256 -0.06 421.002 1,438 (Reporting by Trevor Hunnicutt; editing by Diane Craft)