U.S.-based stock mutual funds gain for third straight week: Lipper

NEW YORK Thu Jan 24, 2013 8:21pm EST

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NEW YORK (Reuters) - Investors in U.S.-based funds committed $3.66 billion to stock mutual funds in the latest week, showing continued support for stocks from retail investors this year, data from Thomson Reuters' Lipper service showed on Thursday.

The latest inflows, for the week ended January 23, mark the third consecutive week of big gains for stock mutual funds. They were largely unchanged from inflows of $3.75 billion the previous week, and amount to roughly half of the huge inflows of $7.53 billion that jumpstarted the year.

"Investors are willing to let their bets ride," said Jeff Tjornehoj, head of Americas Research at Lipper, on the continued cash surge into stock mutual funds.

Bond funds, meanwhile, attracted $3.9 billion in inflows after raking in $4.63 billion the prior week. Bond mutual funds reaped $3.54 billion in new cash, while bond exchange-traded funds gained a modest $356.3 million.

Investors in stock mutual funds continued to favor international stocks while still directing a substantial amount of cash toward U.S. stocks. Mutual funds that specialize in U.S. stocks attracted $1.42 billion, while those that hold international stocks attracted $2.24 billion.

The strong turnout for stock mutual funds again failed to apply to ETFs overall. Stock ETFs had total outflows of $735 million, as investors pulled roughly $3.1 billion from ETFs that hold U.S. stocks. Those that hold international stocks, however, stood out with inflows of $2.35 billion.

Investors continued to pull money out of the SPDR S&P 500 ETF, with $4.36 billion leaving the fund in the latest week.

"Apple is a big holding in the fund, so this could be a vote against Apple," Tjornehoj said. Shares in Apple,, which is the world's most valuable publicly traded company, fell 8 percent on Wednesday after the company recorded quarterly revenue that slightly missed expectations while sales of its iPhone came in weak.

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 rose 1.5 percent over the reporting period. Signals that Republican leaders would pass a nearly four-month extension of the U.S. debt ceiling, upbeat data on U.S. unemployment claims, and strong earnings from technology companies boosted sentiment.

Investors put $2.1 billion to work in funds that hold investment-grade bonds, showing continued preference for higher quality over riskier high-yield bond funds, which attracted $511.6 million.

"I think we can have a market where equities and bonds both get inflows," Tjornehoj said. He added that investors who fear stocks tend to favor investment-grade bonds for their reduced risk.

Flexible funds, which can invest in both stocks and bonds worldwide, also continued to win favor with inflows of $1.31 billion. In the previous week, the funds attracted $1.47 billion.

(Reporting by Sam Forgione' Editing by Lisa Shumaker)

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