Retail investors exit US stock funds, look elsewhere -Lipper

Thu Feb 14, 2013 8:48pm EST

By Sam Forgione
    NEW YORK, Feb 14 (Reuters) - Investors in U.S.-based funds
gave $2.4 billion to stock mutual funds in the latest week, the
fifth consecutive week of inflows, but all the cash was placed
into international equities, data from Thomson Reuters' Lipper
service showed on Thursday.
    Mutual funds that hold international stocks attracted more
than $3 billion in new cash in the week ended Feb. 13. Mutual
funds that hold U.S. stocks, meanwhile, suffered their first
outflows over a weekly period this year of $617.5 million.
    Stock funds pulled in large amounts of cash in the first
five weeks of this year, supporting the S&P 500's 
year-to-date rise of 6.7 percent. Both stock mutual funds and
exchange-traded funds drew $40.3 billion in new money over that
timeframe, fueling talk of a "great rotation" into stocks.
    In the latest week, mutual funds that hold emerging market
stocks found favor with $1.6 billion in new cash. 
    Investors pulled $1.8 billion out of stock exchange-traded
funds after betting $2 billion on the funds the prior week. The
SPDR S&P 500 ETF Fund lost fans for the second straight
week as investors redeemed $2.3 billion from the fund. 
    Bond mutual funds attracted $2.9 billion in new cash over
the week, exceeding the cash gains into stock mutual funds. Bond
ETFs gained a modest $396.7 million in new money after redeeming
over $1 billion to investors the prior week. 
    Both bond mutual funds and ETFs combined took in $3.3
billion over the week, up from $2.27 billion the previous week. 
    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 just 0.5 percent over Lipper's
weekly reporting period. Data showing that the U.S. trade
deficit narrowed in December and strong international trade in
China and Germany boosted sentiment. 
    Concerns over the euro zone debt crisis were rekindled,
however, after European Central Bank President Mario Draghi said
the region would face further economic weakness.
    Investors showed less aversion toward high-yield "junk" bond
funds in the latest week, and pulled just $165.5 million from
the funds after redeeming a sizeable $1.38 billion from the
funds the prior week. 
    Investment-grade corporate bonds still found favor as $1.34
billion flowed into funds that hold the securities. The bonds
sport a higher-quality credit rating than their riskier
high-yield counterparts.
    Money-market funds, which are low-risk vehicles that invest
mainly in short-term securities, had outflows of $9.73 billion
over the week. Those were the largest outflows since October
2012.
    Flexible funds, which can invest in stocks and bonds of any
origin, continued to win favor with inflows of $1.88 billion.
    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          0.599     0.02    3,153.570  10,124
 Domestic Equities         -3.653    -0.16   2,337.303  7,508
 Non-Domestic Equities     4.252     0.53    816.267    2,616
 All Taxable Bond Funds    3.311     0.21    1,548.373  4,830
 All Money Market Funds    -9.732    -0.41   2,386.545  1,367
 All Municipal Bond Funds  0.491     0.15    326.232    1,352
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