Equity ETF outflows dominate, bond funds gain-Lipper

By Daniel Bases
NEW YORK, May 17 (Reuters) - Investors trimmed their
holdings of U.S.-domiciled equity funds in the week ended May
16, a result of continued pummeling of exchange traded funds as
institutional investors focus on safety, data from Thomson
Reuters Lipper showed on Thursday.
Equity funds, including ETFs which are thought to
anecdotally reflect professional investor sentiment, had net
outflows of $2.58 billion.
Excluding ETFs, actively managed funds that are typically
purchased by retail investors had net inflows of $245 million,
reflecting an ongoing dichotomy in the market.
"A $245 million inflow for equity funds is really not too
inspiring on the mutual fund side. I think this market dynamic
reflects a continued setting up for a risk-off environment,"
said Matthew Lemieux, analyst at Lipper.
"People are taking some risk, and some profits, off the
table. There is a natural sell in May pressure but that also
combines with the negative news coming out of Europe," he added.
When looked at in isolation, equity ETFs have had net
outflows for eleven of the last fourteen weeks.
While fixed income funds generally represent a lower risk
profile, there was evidence that investors were playing it safer
in this arena too.
Lipper reported $3.9 billion in net purchases for taxable
bond funds, with much of the cash moving into higher quality
areas such as corporate investment grade and U.S. Treasury
funds.
Investment grade corporate bond funds had inflows of $1.54
billion while U.S. Treasury funds pulled in a net $893 million.
High yield bond funds, which carry higher risk profiles, had
a paltry inflow of $1.82 million.
"That's a pretty low number for this sector and I think a
qualifier for a less robust risk environment akin to what we are
seeing in equities," said Lemieux.
Municipal bond funds had a healthy inflow of $805 million.
The ETF with the biggest net outflow was the large-cap State
Street SPDR S&P 500, which saw net redemptions of $2.975
billion. The fund is on track for its worst quarterly
performance since the first quarter of 2010, already having seen
a net outflow of $6.1 billion. In the first quarter of this year
net redemptions totaled $2 billion.
Financial sector and emerging market sector equity ETFs were
also sold off in the past week.
Equity income funds, which offer investors a chance for
higher returns than fixed income funds, had net inflows of $220
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 -2.583 -0.09 2,666.421 10,313
Domestic Equities -2.295 -0.11 2,037.007 7,733
Non-Domestic Equities -0.288 -0.04 629.414 2,580
All Taxable Bond Funds 3.900 0.28 1,392.456 4,610
All Money Market Funds -3.786 -0.17 2,275.863 1,416
All Municipal Bond Funds 0.805 0.27 296.688 1,352