Investors swarmed into bond funds ahead of Jackson Hole: EPFR
NEW YORK |
NEW YORK (Reuters) - Investors continued to bet on U.S. bond funds in the latest week as investors played it safe in the face of continued economic weakness, data from EPFR Global showed on Friday.
U.S. bond funds raked in $3.93 billion in inflows in the week ended August 29, nearly a billion more than the previous week, according to the fund-tracking firm.
Bond funds globally attracted $5.3 billion in net new money, up from $4.9 billion the previous week.
The move into U.S. bonds came during a period leading up to Thursday's annual Federal Reserve retreat in Jackson Hole, Wyoming. Market observers said investors were shunning risk while waiting to see if Federal Reserve Chairman Ben Bernanke would give any indication that the U.S. central bank would engage in more bond-buying to boost the economy.
On Friday, Bernanke did not say anything specific on future policy moves, although he noted that the job market remains a "grave concern."
Kate Warne, investment strategist at Edward Jones, said Bernanke's comments were an indication the Fed "will be at least generally supportive" of more bond buying.
Still, investors did not shy away from risk altogether.
The ongoing appetite for yield drove $1.61 billion into high-yield "junk" bond funds and extended the record inflow streak to $52.4 billion this year, said EPFR Global.
"People are still looking for income when CDs and risk-free rates are so low," said Margaret Patel, senior portfolio manager at Wells Capital Management.
U.S. equity funds attracted $1.7 billion in inflows, reversing outflows of $1.76 billion the previous week. Much of that new money into stocks went into large-cap exchange-traded funds, said Cameron Brandt, EPFR Global's director of research.
During the EPFR data collection period, the benchmark S&P 500 fell .21 percent over the week.
Meanwhile, the yield on the 10-year U.S. Treasury dropped to 1.55 percent on Friday, after Bernanke made his comments on the prospect of additional Fed stimulus.
Across the Atlantic, it was a different story for stocks and bond funds. European stock funds lost $1.2 billion in investor money during the EPFR period and European bond funds recorded $213 million in outflows.
"The negative outlook for Europe and the downgrading of European credits" led to redemptions from European funds, said Patel.
EMERGING MARKETS AND GOLD FUNDS
Emerging market stock funds took in $634 million in investor money, nearly doubling inflows of $324 million the previous week and chalking up their fifth straight week of inflows, EPFR Global said.
Emerging market bond funds attracted $455 million in inflows during the week to surpass $32 billion in inflows for the funds this year, EPFR Global said.
Gold and precious metals funds were the most popular sector-specific category, with inflows of $1.4 billion, the firm said, down slightly from inflows of $1.5 billion the previous week.
Warne said that investors sought gold funds in anticipation of more stimulus from the Fed, which would lead to a decline in the U.S. dollar.
(Reporting by Sam Forgione; Editing by Dan Grebler)
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