U.S. fund investors pour $8.68 billion into stock ETFs -Lipper

Thu Dec 13, 2012 9:50pm EST

By Sam Forgione
    NEW YORK, Dec. 13 (Reuters) - Investors in U.S.-based funds
pumped the most money into stock exchange-traded funds since
mid-September while also putting money into higher-quality
corporate bonds in one of the last reporting weeks of the year,
data from Thomson Reuters' Lipper service showed on Thursday. 
    Stock ETFs pulled in $8.68 billion in investor cash in the
week ended Dec. 12, the most since mid-September. The inflows
offset outflows of $3.71 billion from stock mutual funds,
leading to net inflows of $4.97 billion into stock funds.
    Investors were less drawn to bond funds overall than they
were to stocks, and committed a net $1.24 billion into the
funds. Bond mutual funds attracted $674.6 million, while bond
ETFs attracted $570.34 million, which was the most cash
committed to the passive funds in five weeks.
    ETFs are generally believed to represent the investment
behavior of institutional investors, while mutual funds are
thought to represent the retail investor.
    Institutional investors such as asset management firms tend
to invest in ETFs toward the end of the year rather than in
active funds, said Lipper analyst Matthew Lemieux.
    Uncertainty over whether U.S. President Barack Obama and
Congress will resolve the "fiscal cliff" of $600 billion in tax
increases and spending cuts could also be motivating the less
active investments, Lemieux added.
    Despite gridlock over the budget deal, the benchmark S&P 500
 stock index rose 1.36 percent over the reporting period.
Data showing that U.S. non-farm payrolls added 146,000 jobs in
November temporarily boosted confidence, although concerns over
the "fiscal cliff" and data showing a plunge in consumer
sentiment tempered optimism.
    On Wednesday, the last day of Lipper's reporting period, the
Federal Reserve fulfilled expectations by ramping up its
monetary stimulus and committing to monthly purchases of $85
billion in Treasuries and mortgage-backed bonds in an effort to
improve U.S. economic growth.
    Among stock funds, investors put $3.87 billion into the SPDR
S&P 500 ETF fund, and $1.57 billion into the iShares: MSCI
Emerging Markets Fund, another ETF.
    Among bond funds, investors poured $1.29 billion into funds
that hold investment-grade corporate bonds, the most in five
weeks.
    Investors may consider riskier high-yield corporate bonds -
whose funds attracted just $258.9 million over the period - as
overpriced, while higher-quality investment-grade bonds also
have the advantage of being less risky, said Lemieux.
    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  Assets     Count
                           ($Bil)              ($Bil)     
 All Equity Funds          4.970     0.17      2,891.889  10,050
 Domestic Equities         2.691     0.13      2,155.319  7,446
 Non-Domestic Equities     2.279     0.32      736.571    2,604
 All Taxable Bond Funds    1.245     0.08      1,509.496  4,734
 All Money Market Funds    4.039     0.17      2,349.824  1,390
 All Municipal Bond Funds  0.311     0.10      324.045    1,340
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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