U.S.-focused stock mutual funds regain favor with inflows of $924.6 mln -Lipper

Thu Feb 21, 2013 9:02pm EST

By Sam Forgione
    NEW YORK, Feb 21 (Reuters) - Investors in U.S.-based funds
committed $924.6 million in new cash to mutual funds that hold
U.S. stocks in the latest week after redeeming from the funds
the previous week, data from Thomson Reuters' Lipper service
showed on Thursday. 
    The new money from retail investors in the week ended Feb.
20 marked a rebound from the prior week, when mom-and-pop
investors pulled $617.5 million out of U.S. stock funds. Those
were the first weekly outflows from the funds this year.
    "That would have been a terrific number at almost any time
in 2012," said Jeff Tjornehoj, head of Americas Research at
Lipper, on the inflows into U.S.-focused stock mutual funds.
     Tjornehoj said, however, that the new demand for U.S. stock
mutual funds trailed strong demand in each of the first five
weeks of the year. The funds gained well over $1 billion in each
of those weeks, leading to total cash gains of $10.77 billion
over the five-week run.
    Retail investors have poured large sums of cash into stock
mutual funds this year after redeeming heavily from the funds in
2012. U.S.-based stock mutual funds - including those that hold
international and those that hold U.S. stocks - have attracted
nearly $30 billion in new demand over the past seven weeks after
suffering $129.18 billion in outflows last year.
   The new cash into stock funds has supported the stock market,
which, prior to recent losses, had risen 7 percent since the
start of the year. The inflows have suggested renewed confidence
in stock markets.
    Retail investors gave $1.7 billion in new money to mutual
funds that hold stocks outside of the United States. Those
inflows lagged the prior week's cash gains of $3 billion and
were the least over a weekly period so far this year.
    Both U.S. and non-U.S. mutual funds combined attracted $2.62
billion in new cash over the week, up from the previous week's
inflows of $2.4 billion. 
    Exchange-traded funds had inflows of just $237 million over
the reporting period. U.S. ETFs suffered outflows of $968.5
million, owing mostly to the SPDR Gold Trust 's outflows
of $1.37 billion. Investors remained dedicated to non-U.S. ETFs
and bet $1.2 billion on the funds.
    ETFs are generally believed to represent the investment
behavior of institutional investors, while mutual funds are
thought to represent the retail investor.
    Overall, stock mutual funds and ETFs had inflows of $2.86
billion over the week, up from the prior week's inflows of
$598.8 million. 
    The benchmark S&P 500 fell 0.55 percent over the
weekly period. Data showing that gross domestic product in the
euro zone contracted 0.6 percent in the fourth quarter of 2012,
a decline in the shares of top retailer Wal-Mart, and
Federal Reserve minutes suggesting that fiscal stimulus may halt
sooner than expected weighed on markets.
    Retail investors gave $2.43 billion to bond mutual funds,
down from $2.9 billion the prior week and marking the least
demand for the funds since the start of the year. Outflows of
$238.7 million from bond ETFs cut into the overall inflows into
bond funds, which were $2.19 billion.
    Investment-grade corporate bond funds continued to win fans,
as $1.56 billion flowed into the funds compared with $1.34
billion the previous week. Riskier high-yield "junk" bond funds
suffered outflows of $125.17 million. 
    Many investors are still not comfortable moving into stocks,
said Tjornehoj of Lipper, and have favored funds that hold
investment-grade corporate bonds for their relative safety.
    Money market funds bled $19.02 billion in outflows, the most
since late October. Institutional investors pulled $20.24
billion out of the funds, while retail investors put over $1
billion into the funds.
    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          2.860      0.09    3,130.468  10,148
 Domestic Equities         -0.044     -0.00   2,315.985  7,530
 Non-Domestic Equities     2.904      0.36    814.483    2,618
 All Taxable Bond Funds    2.192      0.14    1,550.451  4,841
 All Money Market Funds    -19.016    -0.81   2,335.733  1,361
 All Municipal Bond Funds  0.292      0.09    326.554    1,355
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