U.S. fund investors seek safety after Trump rally in latest week

(Adds details on mutual funds and ETFs, analyst comment, table) By Trevor Hunnicutt NEW YORK, Jan 26 (Reuters) - Investors pulled cash from stock funds and bought government bonds during the latest week, favoring a defensive stance over the risk-trading spectacle that has followed the presidential election, Lipper data for U.S.-based funds showed on Thursday.

U.S.-based stock mutual funds and exchange-traded funds posted $5.7 billion in outflows during the week through Jan. 25, while money-market funds took in $19.8 billion and taxable bond funds added $2.8 billion, the research service's data showed.

"A lot of people were saying 'Buy on the vote and sell on the inauguration,'" said Tom Roseen, Head of Research Services for Thomson Reuters Lipper. "What we saw here was a flight to safety." President Donald Trump was sworn into office last Friday after being elected in November. He and his Republican party, which controls Congress, have touted potential moves to slash regulations as well as taxes.

Stocks have spiked on the Trump win, driving a rally that culminated Wednesday in the Dow Jones Industrial Average breaching 20,000 for the first time.

In retrospect, that may have been the easy part. Now the tide of flows is turning against U.S. stocks.

Funds focused on domestic stocks posted $8.6 billion in withdrawals during the week, while international equity funds drew in $2.8 billion during their best week of sales since last March, Lipper data showed.

Within bonds, the safety implied by government backing was in demand, while the IOUs of risky companies were less sought after.

Treasury funds took in $1.7 billion, their largest inflows in a year, while high-yield bond funds posted $532 million in outflows.

For their part, financial and healthcare sector stocks each bled more than $700 million during the week, a change of fortune after initially thriving following the election.

Technology sector funds took in $915 million in their best week of sales since September 2006. The funds rallied by 2.5 percent during a week in which Yahoo Inc a posted better-than-expected quarterly profit and tech stocks posted their best one-day performance of the new year.

European Central Bank President Mario Draghi last Thursday said policymakers would keep up stimulus despite strong economic indicators. European and Japanese stock funds took in a combined $439 million, while emerging markets which also benefit from the easy-money policies drew $1 billion.

The following is a broad breakdown of the flows for the week, including mutual funds and exchange-traded funds: Sector Flow Chg Assets Assets Count ($ blns) (in pct) ($ blns) All Equity Funds -5.743 -0.10 5,625.448 11,823 Domestic Equities -8.583 -0.22 4,022.802 8,452 Non-Domestic Equities 2.840 0.18 1,602.646 3,371 All Taxable Bond Funds 2.833 0.12 2,305.274 5,935 All Money Market Funds 19.794 0.86 2,323.148 1,026 All Municipal Bond Funds 0.007 0.00 368.142 1,401 (Reporting by Trevor Hunnicutt; editing by Jennifer Ablan, G Crosse)