Reuters: US Dollar Report: US-based stock mutual fund streak persists, stock ETFs bleed -Lipper

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US-based stock mutual fund streak persists, stock ETFs bleed -Lipper Mar 1st 2013, 00:31 Thu Feb 28, 2013 7:31pm EST By Sam Forgione NEW YORK, Feb 28 (Reuters) - Investors in U.S.-based funds poured cash into stock mutual funds for the eighth straight week but abandoned stock exchange-traded funds as global concerns rippled markets, data from Thomson Reuters' Lipper service showed on Thursday. Stock mutual funds attracted $2.81 billion in new cash over the weekly period ended February 27, the most in three weeks and the eighth consecutive week of inflows for the funds. Funds that hold stocks outside of the U.S. captured most of the demand with inflows of $2 billion. Investors soured on exposure to stocks through ETFs, however, and pulled a sizeable $3.75 billion out of the funds. Those were the biggest redemptions from the funds since mid-November. The outflows indicate opportunistic moves out of funds that track major stock indexes. Mom-and-pop investors have changed course and committed roughly $32.7 billion to stock funds so far this year after redeeming $129.2 billion from the funds in 2012. Funds that hold stocks outside of the U.S. have attracted $20.8 billion, while funds that hold only U.S. stocks have gained $11.9 billion. "Investors see the opportunity," said Tom Roseen, head of research services at Lipper, on the inflows into stock mutual funds. The new demand for stock mutual funds indicates more upbeat sentiment toward stock markets and the state of economic growth. Mutual funds that hold emerging market stocks had a strong week with inflows of $1.12 billion after posting cash gains of $900 million the prior week. Among ETFs, the SPDR Gold Trust suffered further outflows of $2.08 billion after investors redeemed $1.37 billion the prior week. Investors also pulled $736.7 million out of the SPDR S&P 500 ETF. "If you think that the economy's on the mend and you're not worried about inflation, then it is time to take some profits," Roseen of Lipper said on the outflows from the gold ETF. The big outflows from stock ETFs eclipsed the inflows into stock mutual funds and amounted to net outflows of $939.8 million from stock funds over the week. That marked the first week of outflows from stock funds overall since late December of 2012. ETFs are generally believed to represent the investment behavior of institutional investors, while mutual funds are thought to represent the retail investor. The benchmark S&P 500 rose just 0.27 percent over the reporting period. Federal Reserve Chairman Ben Bernanke reassured investors that the central bank would continue its monetary stimulus program on Feb. 26, leading to a jump in U.S. stock markets. Uncertainty surrounding the Italian elections stoked concerns over the euro zone debt crisis, however, while U.S. President Barack Obama and Congress remained deadlocked over how to prevent $85 billion in automatic government spending cuts from taking effect on March 1. Concerns over stock markets helped push $2.92 billion in new cash into bond mutual funds over the week, up from $2.43 billion the prior week. Bond ETFs won fans with inflows of $1.05 billion, the biggest heap of cash commitments since early November. The strong turnout for bond mutual funds and ETFs amounted to roughly $4 billion in total inflows into bond funds over the week, which marked the biggest inflows in six weeks. Funds that invest in floating-rate corporate loans, which protect against rising interest rates, had inflows of $1.32 billion over the week. That marked the second highest inflow on record. The funds have raked in high demand of $7.9 billion in new cash so far this year. "People were in search for yield here, and they were protecting their portfolio as well," Roseen said on the inflows into loan funds. Investment-grade corporate bond funds continued to reap gains with inflows of $2.08 billion, the most in five weeks. Riskier high-yield "junk" bond funds, meanwhile, had outflows of $267.5 million, the most in three weeks. Money market funds, which are low-risk vehicles that invest in short-term securities, had inflows of $3.64 billion after suffering big outflows of $19.02 billion the prior week. 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 -0.940 -0.03 3,127.796 10,155 Domestic Equities -2.591 -0.11 2,316.991 7,534 Non-Domestic Equities 1.651 0.20 810.805 2,621 All Taxable Bond Funds 3.975 0.26 1,556.859 4,853 All Money Market Funds 3.639 0.15 2,365.051 1,371 All Municipal Bond Funds 0.324 0.10 327.651 1,358 Link this Share this Digg this Email Reprints

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