Investors close year with bets on stock ETFs -Lipper

Thu Dec 27, 2012 11:07pm EST

By Sam Forgione
    NEW YORK, December 27(Reuters) - Investors in U.S.-based
funds favored stock exchange-traded funds (ETFs) and emerging
market equity mutual funds as the year wound down, data from
Thomson Reuters' Lipper service showed on Thursday. 
    It said in the week ended December 26, the last reporting
period of the year, investors poured $2.53 billion into stock
ETFs, the least in five weeks, but this was more than stock
mutual funds, which attracted $508 million in new cash.
    The inflows into stock mutual funds, while modest, mark a
turnaround for the funds which had seen outflows over the prior
six weeks, including a massive $6.43 billion outflow over the
previous reporting period. 
    Inflows of $1.26 billion into mutual funds that hold
non-U.S. stocks, mostly in emerging markets, offset outflows of
$751 million from those that hold U.S. stocks, leading to the
net inflow into stock mutual funds. Overall, stock ETFs and
stock mutual funds combined attracted $3.03 billion over the
period.
    "Emerging markets have continued to be a strong group for
inflows regardless of market action," said Lipper analyst
Matthew Lemieux.
    ETFs are generally believed to represent the investment
behavior of institutional investors, while mutual funds are
thought to represent the retail investor.
    Bond funds, meanwhile, attracted $936.3 million in inflows
after outflows of $1.6 billion the prior week. Inflows of $1.81
billion into bond mutual funds offset outflows of $872.2 million
from bond ETFs, resulting in the positive sum.
    For the year, bond funds attracted far more new cash than
stock funds, with $297.3 billion flowing into funds that hold
taxable bonds. Bond mutual funds attracted $255.8 billion of
that sum, while bond ETFs pulled in the remaining $41.45
billion. 
    Stock funds, by comparison, attracted just $13.56 billion in
net new cash over the year despite the S&P 500's roughly 13
percent gain. The modest total inflow into stock funds was a
result of bets on stock ETFs amounting to $100.9 billion, which
offset outflows of $87.31 billion from stock mutual funds. 
    The DoubleLine Total Return Bond Fund dominated
the last weekly reporting period with inflows of $268.8 million,
the most among all bond funds.
    Higher-quality investment-grade bond funds gained favor and
attracted $712.5 million, while riskier high-yield bond funds
suffered outflows of $354.9 million. 
    Low-yielding money market funds pulled in $18.2 billion over
the period after investors yanked $9 billion from the funds the
prior week. 
    Investment-grade bond funds "continue to be the highest
preference for investors in times of concern," said Lemieux of
Lipper.
    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     3.033      0.10    2,884.881  9,983
 Domestic Equities    0.161      0.01    2,137.985  7,400
 Non-Domestic         2.872      0.38    746.896    2,583
 Equities                                           
 All Taxable Bond     0.936      0.06    1,504.746  4,748
 Funds                                              
 All Money Market     18.188     0.78    2,344.363  1,357
 Funds                                              
 All Municipal Bond   -0.423     -0.13   317.584    1,337
 Funds