Stock funds gain $12.71 bln, ending stellar January -Lipper

Thu Jan 31, 2013 7:44pm EST

By Sam Forgione
    NEW YORK, Jan 31 (Reuters) - Investors poured $12.71 billion
into U.S.-based stock mutual funds and exchange-traded funds in
the latest week, concluding the strongest four-week flows into
stock funds since 1996, data from Thomson Reuters' Lipper
service showed on Thursday. 
    Demand for both stock mutual funds and ETFs rose in the week
ended Jan. 30. Investors gave $5.78 billion to stock mutual
funds, up from $3.66 billion the prior week and showing retail
investors' faith in stocks. 
    Stock ETFs attracted $6.93 billion, the most since the first
full week of the year, when they pulled in $10.78 billion. Stock
mutual funds and ETFs have raked in $34.2 billion in the past
four weeks, the best four-week stretch since 1996, Lipper
analyst Matthew Lemieux said.
    "It's a good sign," Lemieux added on the persistent inflows
into stock funds. "It reinforces the thought that investors in
general have a better sentiment on the market and the economy."
    Mutual funds and ETFs that hold U.S. stocks gained more
money in the latest week than funds that hold foreign stocks.
Mutual funds that hold U.S. stocks attracted $2.93 billion,
while those that hold foreign stocks attracted $2.85 billion. 
    ETFs that hold U.S. stocks, meanwhile, attracted $5.65
billion in new cash, the most in seven weeks and far exceeding
the $1.29 billion inflow into ETFs that hold foreign stocks. The
SPDR S&P 500 ETF fund made a comeback with inflows of
$4.57 billion, reversing outflows of $4.36 billion the prior
week.
    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, still pulled in $3.74 billion in new
cash, which was slightly under the $3.9 billion the funds gained
the prior week. Bond mutual funds gained $2.93 billion in new
money, their weakest turnout in four weeks, while bond ETFs had
their best turnout this month with inflows of $812.9 million.
    The benchmark S&P 500 rose just 0.5 percent over the
reporting period. Solid corporate earnings from companies such
as Procter & Gamble and Honeywell International 
and upbeat U.S. unemployment and factory data boosted sentiment.
    Central banks also issued influential statements over the
week. The European Central Bank said banks would repay 137
billion euros from crisis loans, returning more cash earlier
than expected and improving sentiment. 
    On the U.S. front, the Federal Reserve kept in place its
purchases of $85 billion in Treasuries and agency mortgage
securities on Wednesday.
    Investors continued to favor investment-grade corporate bond
funds, to which they gave $1.48 billion, although that sum was
down modestly from the prior week's inflows of $2.1 billion. 
    Demand for high-yield "junk" bond funds dwindled as $92.3
million flowed into the funds, down from $511.63 million the
prior week. 
    "It's pretty expensive right now if you're looking at high
yield, especially if you're feeling comfortable on the equity
side," Lemieux of Lipper said.
    Flexible funds, which can invest in stocks and bonds
worldwide, continued to reap high demand with inflows of $1.6
billion, the most so far this 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          12.714    0.41    3,118.686  10,129
 Domestic Equities         8.579     0.37    2,307.451  7,511
 Non-Domestic Equities     4.135     0.52    811.235    2,618
 All Taxable Bond Funds    3.742     0.24    1,542.820  4,824
 All Money Market Funds    0.900     0.04    2,403.694  1,372
 All Municipal Bond Funds  0.574     0.18    325.254    1,347