Reuters: US Dollar Report: Institutional investor slow equity fund buying - Lipper

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Institutional investor slow equity fund buying - Lipper Sep 27th 2012, 21:55 Thu Sep 27, 2012 5:55pm EDT NEW YORK, Sept 27 (Reuters) - Institutional investors slowed their buying into equity funds in the week ended Sept. 26, as retail investors kept dumping the riskier assets, data from Thomson Reuters Lipper service showed on Thursday. U.S.-domiciled equity funds recorded net inflows of $1.136 billion in the reporting period. But that came entirely on the back of $2.434 billion net buying of exchange-traded funds - which was itself a steep drop-off in net ETF buying of recent weeks. Excluding ETFs, equity funds saw net outflows of $1.297 billion. ETFs are generally believed to represent the investment behavior of institutional investors, while mutual funds are thought to represent retail investors. It's possible that institutional investors, eyeing recent encouraging housing data, are willing to put money into riskier assets now on hopes the U.S. recovery is picking up steam, said Tom Roseen, head of research services at Lipper. "I think this is people buying on the dip," he said. Despite concerns about the euro zone debt crisis and uncertainty around the U.S. elections, institutional investors could be willing to add risk, he said. In contrast, retail investors have been more hesitant, he said. This was the seventh straight week that retail investors dumped equity funds. "A lot of people were very fearful of September. Septembers have traditionally been horrible," he said. "People are just very reluctant, and it's because they have been burned so bad" during the financial crisis. In addition, older investors could be rebalancing their portfolios and moving into fixed income instead, he added. "America's getting grayer, and as that happens people move into more, I think, fixed income and probably less volatile types of securities," Roseen said. The S&P 500 fell 1.9 percent over the reporting period as worries about global growth came to the fore and a rally after the Federal Reserve launched another stimulus round faded. Money market funds notched a net entry of $3.939 billion, for a third week of net inflows out of four. Taxable bond funds, considered something of a safe haven with interest rates at record lows, saw net gains of $4.016 billion, just under the rate of inflows in recent weeks. Corporate high-yield funds saw net outflows of about $310 million, their first such loss after 15 weeks of gains. But investment grade corporate bond funds had inflows of $2.29 billion, a 15th straight week of net gains. Municipal bond funds had net gains of $592 million. Since September of last year, those funds have had net outflows in only three separate weeks. Excluding ETFs, equity income funds pulled in a net $145 million. Net gains edged down to about $141 million when ETFs are included. Equity income funds have been relatively consistent gainers over recent years, providing an alternative for yield-hungry investors balking at record-low interest rates.  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 1.136 0.04 2,868.936 10,039 Domestic Equities 0.941 0.04 2,178.963 7,447 Non-Domestic Equities 0.196 0.03 689.973 2,592 All Taxable Bond Funds 4.016 0.28 1,458.850 4,615 All Money Market Funds 3.939 0.17 2,324.400 1,399 All Municipal Bond Funds 0.592 0.19 311.730 1,336 Link this Share this Digg this Email Reprints

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