Reuters: US Dollar Report: Institutional investors net sellers of equity funds-Lipper

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Institutional investors net sellers of equity funds-Lipper Jun 28th 2012, 22:18 Thu Jun 28, 2012 6:18pm EDT By Luciana Lopez NEW YORK, June 28 (Reuters) - Institutional fund investors dumped equities in the week ended June 27, while retail investors left the sector in smaller numbers, data from Thomson Reuters' Lipper service showed on Thu rsday. Equity funds recorded net outflows of $8.93 billion. Of that, exchange-traded equity funds had a net outflow of $8.801 billion for the week, their biggest exodus since November. ETFs are anecdotally believed to represent the investment behavior of institutional investors, while mutual funds are thought to represent the retail investor. "A lot of those flows were in S&P 500 index area. Is that a little bit of a vote against the recovery?" said Jeff Tjornehoj, head of Americas Research at Lipper. While that is a small number overall, he said, "at the margin, investors are not sure of what they like out there." Excluding ETFs, retail investors pulled about $130 million out of equity mutual funds, a fifth week of outflows in the last six. During the reporting week, Spain formally became the fourth euro zone state to ask for help, with Cyprus also requesting help on Monday from their European partners. The benchmark U.S. S&P 500 stock index was 1.8 percent lower for the week in question. Money market funds pulled in cash, capping three straight weeks of outflows in a safe-haven play by investors worried that rising Spanish and Italian bond yields, as well as ongoing turmoil in Greece, mean the euro zone sovereign debt crisis is far from over. Those funds drew in a net $7.064 billion for the week. Taxable bond funds, also something of a safe haven, had net inflows for a third straight week, pulling in $2.14 billion. Government mortgage funds pulled in $397 million. Corporate high-yield funds maintained steady inflows, with net buying of $960 million. Investment grade corporate bond funds, while pulling in a healthy $1.1 billion, were down from the prior week's $2.3 billion net inflow. Municipal bond funds had net inflows of $625 million. "Municipal debt funds are solidly in a good place in investors' eyes," Tjornehoj said. "Despite events in, say, Stockton, California, they still believe in municipal debt." Stockton is expected to file for bankruptcy before the end of the week, becoming the largest U.S. city to seek protection from its creditors. Another sour note for equity income funds came from ETFs, which pulled the overall sector toward net outflows of $27.3 million. However, retail investors remain committed to the sector, which largely helped them replace lost income due to record low interest rates. Excluding ETFs, equity income funds pulled in a net $53.2 million - still a sharp drop-off from the prior week's net purchases of $145 million. The weekly Lipper fund flow data is compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds. The following is a broad breakdown of the flows for the week, including exchange-traded funds (in $ billions): Sector Flow Chg % Assets Count ($Bil) Assets ($Bil) All Equity Funds -8.930 -0.33 2,664.558 10,325 Domestic Equities -7.633 -0.37 2,038.106 7,728 Non-Domestic Equities -1.297 -0.20 626.452 2,597 All Taxable Bond Funds 2.140 0.15 1,424.724 4,684 All Money Market Funds 7.064 0.31 2,261.429 1,425 All Municipal Bond Funds 0.625 0.21 300.681 1,360 Link this Share this Digg this Email Reprints

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