Reuters: US Dollar Report: US-based stock fund gains fall to $740 mln amid Cyprus fears-Lipper

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US-based stock fund gains fall to $740 mln amid Cyprus fears-Lipper Mar 28th 2013, 23:41 Thu Mar 28, 2013 7:41pm EDT By Sam Forgione NEW YORK, March 28 (Reuters) - Investors put a net $740 million into U.S.-based stock funds in the latest week, less than half the prior week's inflows, as worries over Cyprus's bailout limited stock market gains, data from Thomson Reuters' Lipper service showed on Thursday. The demand for stock funds fell to a four-week low as investors pulled $1.4 billion from international stock exchange-traded funds, or ETFs, in the week ended March 27. "There were some continuing concerns about this whole Cyprus issue," said Lipper analyst Matthew Lemieux. "Some investors were probably just taking profits." Bond funds continued to be a major beneficiary of global concerns about risk. Taxable bond funds attracted a net $3.85 billion over the week, though the figure is down from $5.18 billion the previous week. Investors put $1.57 billion into investment-grade corporate bond funds, down from $2.35 billion the prior week. The low appetite for risk also sent investors into Treasury ETFs, which pulled in $810 million, the most since early November of last year. The benchmark 10-year Treasury yield fell to 1.85 percent on March 27 on worries of a run on Cypriot bank deposits. Money market funds, which are low-risk vehicles that invest in short-term securities, pulled in $888.7 million, a reversal from the prior week's outflows of $25.54 billion. Funds that hold corporate loans - which offer floating rates as a hedge against rising interest rates - attracted $1.26 billion, down from the prior week's record-high inflows of $1.55 billion but still robust. Riskier high-yield "junk" bond funds pulled in just $34.1 million, down from $200.9 million the previous week. Mutual funds that hold stocks of companies outside of the United States took in $1.63 billion, overshadowing demand for U.S. stock mutual funds, which gained just $640.4 million. That amount was the least in six weeks. Despite the strong demand for mutual funds that hold international stocks, investors pulled $1.4 billion out of ETFs that hold those stocks, accounting for much of the $1.53 billion in overall outflows from stock ETFs over the week. Among those ETF outflows, investors pulled $1.6 billion from iShares: MSCI Emerging Market ETF. The SPDR S&P 500 ETF Trust, meanwhile, bled $3.03 billion. The outflows from the S&P index fund were largely offset by inflows into other U.S. ETFs, including $2.33 billion in new commitments to the iShares: Russell 2000 Index Fund. ETFs are generally believed to reflect the investment behavior of institutional investors, while mutual funds are thought to represent the retail investor. The big redemptions from international stock ETFs slashed total inflows into international stock funds to just $236.52 million, the least since late September 2012. Funds that hold U.S. stocks, meanwhile, attracted $503.5 million overall, down from $1.58 billion the prior week. The benchmark S&P 500 rose just 0.3 percent over the reporting period amid worries that Cyprus's 10 billion-euro ($13 billion) bailout deal with the European Union and International Monetary Fund and its negative impact on bank bondholders and large depositors could set a precedent for other cash-strapped euro zone nations. Those concerns, along with fears of a run on Cypriot banks, kept markets quiet despite positive U.S. housing and manufacturing data. The Dow Jones Industrial Average rose a slight 0.1% over the reporting period after ending a record-breaking rally that continued through March 14. On Thursday, a day after Lipper's reporting period ended, the S&P 500 gained 0.41 percent to reach a record closing high of 1,569.18 amid upbeat data on U.S. economic growth and relief that a run on Cypriot bank deposits failed to materialize. 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 % of Assets Count ($Bil) Assets ($Bln) All Equity Funds 0.740 0.02 3,215.624 10,196 Domestic Equities 0.504 0.02 2,397.750 7,528 Non-Domestic Equities 0.237 0.03 817.874 2,668 All Taxable Bond Funds 3.848 0.24 1,580.743 4,885 All Money Market Funds 0.889 0.04 2,330.076 1,359 All Municipal Bond Funds -0.043 -0.01 326.078 1,384 Link this Share this Digg this Email Reprints

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