U.S. stock mutual funds gain $7.5 bln, most since 2001 -Lipper

Thu Jan 10, 2013 10:10pm EST

By Sam Forgione
    NEW YORK, Jan. 10 (Reuters) - Investors in U.S.-based funds
poured $7.53 billion into stock mutual funds, the most since
2001, after U.S. lawmakers reached a deal to avert tax increases
and spending cuts, data from Thomson Reuters' Lipper service
showed on Thursday. 
    The inflow into stock mutual funds in the week ended January
9 was the biggest since May of 2001, while stock exchange-traded
funds gained $10.78 billion in new cash. 
    When combined, the sums of cash into the two fund groups
amounted to a massive $18.32 billion inflow into stock funds
overall. That is the most net new cash since mid-2008.  
    Bond funds, meanwhile, attracted $4.24 billion in new cash.
Bond mutual funds attracted $5.45 billion, the most since
October of 2011, while bond ETFs suffered outflows of $1.21
billion.
    The new cash into stock mutual funds was a far greater
weekly turnout for the group than any other week last year, when
retail investors opted for bond mutual funds and stock
investments were dominated by opportunistic moves into ETFs. 
    "People were waiting to put money to work," said Tom Roseen,
head of research services at Lipper. 
    "We got a resolution, period. And that was looming over
everyone's heads," Roseen said on the "fiscal cliff" of $600
billion in tax hikes and spending cuts.
    In a surprising turn, stock ETF investors pulled the most
money out of the SPDR S&P 500 ETF, which has been a favorite for
investors in past weeks. Investors yanked $1.26 billion out of
the fund while catching exposure to emerging markets by giving
$2.94 billion to the ishares: MSCI Emerging Market fund.
    Roseen said that investors sought to capture profits from
the SPDR index fund that tracks the benchmark U.S. stock index.
    ETFs are generally believed to represent the investment
behavior of institutional investors, while mutual funds are
thought to represent the retail investor.
    The benchmark S&P 500 index fell a slight .1 percent
over the reporting period as news that the U.S. private sector
stepped up hiring last month and encouraging data on the U.S. 
services sector clashed with caution ahead of corporate earnings
and concerns over remaining policy talks over the debt ceiling
and spending cuts.
    On Jan. 1, President Barack Obama and Congress reached a
deal to raise taxes on the wealthiest U.S. citizens while
postponing spending cuts for two months. The deal, overall,
diminished the prospects of a major 2013 overhaul of the U.S.
tax code.
    Roseen of Lipper said that the "relief" of the tax outcome
on capital gains and dividends led investors to put money back
to work in stock mutual funds.
    Along with the stronger appetite for risk in stocks,
investors sought riskier bonds and pumped $1.11 billion into
high-yield "junk" bond funds, the most since mid-September.
Investors also gave $2.16 billion to investment-grade corporate
bond funds, while taking $1.07 billion out of safe-haven
Treasury funds, the most since October of last year.
    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          18.316     0.61    3,004.2  10,044
                                              6        
 Domestic Equities         9.244      0.42    2,228.7  7,447
                                              4        
 Non-Domestic Equities     9.073      1.18    775.532  2,597
 All Taxable Bond Funds    4.237      0.28    1,520.7  4,777
                                              0        
 All Money Market Funds    10.065     0.42    2,392.8  1,335
                                              3        
 All Municipal Bond Funds  1.551      0.49    320.853  1,339
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.