UPDATE 1-U.S.-based stock funds attract $1.7 billion - Lipper

Thu Nov 14, 2013 6:12pm EST

By Sam Forgione
    NEW YORK, Nov 14 (Reuters) - Investors in equity funds based
in the United States committed $1.7 billion in the latest week,
reversing the previous week's outflows amid reassuring U.S.
economic data, data from Thomson Reuters' Lipper service showed
on Thursday.
    The inflows into stock funds in the week ended Nov. 13 came
after investors pulled $2 billion from the funds the previous
week on fears that the U.S. Federal Reserve could scale back its
stimulus in December.
    The Standard & Poor's 500 stock index rose 0.7
percent over the weekly period.
    Strong U.S. data on third-quarter gross domestic product
growth and an unexpected surge in job growth in October drove
demand for stock funds, said Tom Roseen, head of research
services at Lipper. 
    In addition to the data, Fed Presidents Dennis Lockhart and
Narayana Kocherlakota on Tuesday urged an accommodative Fed
policy, easing fears of an imminent pullback in the Fed's $85
billion in monthly bond buying.
    Fed Vice Chair Janet Yellen's opening remarks released late
Wednesday for her appearance at the Senate Banking Committee
bolstered expectations that she would underscore the Fed's
accommodative posture.
    "There was a general consensus that, in fact, the easy money
would continue for quite some time," Roseen said. 
    Funds that hold U.S. stocks attracted over $1.1 billion,
overshadowing inflows of $542.2 million into funds that hold
non-U.S. stocks. Japanese stock funds posted a small outflow of
$4.5 million after inflows of $81.5 million the prior week.
    While stock funds attracted net inflows over the most recent
week, investors pulled $1.9 billion out of emerging market
equity funds, marking their first weekly net outflow since the
week ended Sept. 4.
    The outflows from emerging market funds showed lingering
concerns of a Fed pullback, despite the reassurance of continued
easy money policies during the week, Roseen said.
    The Fed's bond-buying program has kept interest rates low,
leading investors to seek higher returns in emerging market
assets. A looming pullback in the Fed's stimulus has led
investors to exit those markets, Roseen added.
    The concerns also spurred outflows of $336.8 million from
emerging market bond funds. While the funds have had withdrawals
for 14 straight weeks, the latest outflows were the biggest
since early September. 
    Taxable bond funds attracted a meager $69 million in new
cash, marking the fourth straight week of inflows into the
funds. High-yield bond funds attracted $219 million after
investors pulled $879 million from the funds the prior week. 
    The inflows into riskier high-yield junk bond funds showed
investors' appetite for risk, Roseen said. The funds tend to
attract demand alongside stock funds.
    Funds that mainly hold safe-haven U.S. Treasuries had
outflows of $323.7 million, reversing the prior week's small
$23.6 million inflow. In addition, low-risk money market funds
saw $3.2 billion in outflows, marking their first outflow in
four weeks.
    Funds that hold floating-rate bank loans attracted $829.1
million, marking the 74th straight week of new cash into the
funds and the biggest weekly inflows since mid-September. 
    The funds, which are protected from rising interest rates by
being pegged to floating-rate benchmarks, have attracted steady
inflows this year on expectations that the Fed will eventually
cut its stimulus program, which could lead interest rates to
spike higher.  
    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     Assets    Count
                          ($ bln)    (pct)      ($ bln)   
 All Equity Funds          1.680      0.05    3,717.957   10,348
 Domestic Equities         1.138      0.04    2,779.325    7,625
 Non-Domestic Equities     0.542      0.06      938.632    2,723
 All Taxable Bond Funds    0.069      0.00    1,613.017    5,163
 All Money Market Funds   -3.218     -0.14    2,370.111    1,277
 All Municipal Bond       -0.903     -0.32      277.034    1,388
 Funds