U.S.-based money market funds see $43.8 billion net inflow: Lipper

NEW YORK Thu Oct 24, 2013 5:48pm EDT

NEW YORK (Reuters) - Investors poured $43.8 billion into money market funds in the latest week as the threat of a U.S. default faded, data from Thomson Reuters' Lipper service showed on Thursday.

The net inflow in the week ended October 23 came after a similarly sized net outflow in the previous week, as an impasse in Congress brought the U.S. government to the brink of default.

However, Congress last week approved an 11th-hour deal to end a partial government shutdown and avoid a potential default.

Interest rates on ultra-short-term U.S. government debt fell sharply after the deal in Washington.

"I think a lot of this is a snap back from last week, when we had about $43 billion in outflows," said Jeff Tjornehoj, head of Americas research at Lipper.

Investors were previously acting "out of an abundance of caution," he said, and put their money back in after the immediate crisis passed.

Investors also added $16.37 billion to U.S.-based equity funds in the week ended October 23, the largest net inflows since mid-September, the data showed.

Of that, $6.037 billion flowed into mutual funds. Mutual funds are thought to reflect retail investment behavior, while exchange-traded funds, or ETFs, are considered to reflect institutional investors.

The Standard & Poor's 500 Index .SPX rose 1.44 percent in the week from October 16 to 23.

Taxable bond funds added a net $3.121 billion in cash after three straight weeks of outflows.

The weekly Lipper fund flow data is compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds.

(Reporting by Luciana Lopez; Editing by Bob Burgdorfer and Eric Beech)

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