UPDATE 2-U.S.-based stock mutual funds attract $4 bln - Lipper

Thu Jan 23, 2014 7:51pm EST

By Sam Forgione
    NEW YORK, Jan 23 (Reuters) - Investors in funds based in the
United States poured $4 billion into stock mutual funds in the
week ended Jan. 22 on optimism that stocks would rally further,
data from Thomson Reuters' Lipper service showed on Thursday.
    The inflows marked the fifth straight week of new cash into
stock mutual funds, which are commonly purchased by retail
investors. 
    "Investors believe that there is some upward potential
left," said Tom Roseen, head of research services at Lipper, on
the inflows into stock mutual funds. The benchmark Standard &
Poor's 500 stock index rallied nearly 30 percent last
year.
    The inflows came even as the S&P 500 fell a modest 0.2
percent over the holiday-shortened week on some disappointing
corporate earnings. The U.S. stock market was closed on Monday
for the Martin Luther King Jr. holiday.
    Stock exchange-traded funds, meanwhile, had outflows of
about $250 million. The outflows marked the third straight week
of withdrawals from the funds, which are thought to represent
the behavior of institutional investors. 
    The inflows into stock mutual funds and outflows from stock
ETFs resulted in net inflows of $3.8 billion into stock funds
over the weekly reporting period. 
    Investors pulled $3 billion from the SPDR S&P 500 ETF Trust
, which tracks the S&P 500 index. That marked the biggest
outflows from the ETF since November of last year. 
    Investors showed greater appetite for stocks outside the
United States. Funds that specialize in non-U.S. stocks
attracted $2.7 billion of the total cash into stock funds, while
funds that specialize in U.S. stocks attracted about $1.1
billion.
    European stock funds stood out with inflows of $1.3 billion,
marking the biggest weekly inflows into the funds since Lipper
records began in 1992. European shares extended their new year
rally over the period and hit 5-1/2-year highs on Jan. 21.
    The FTSEurofirst 300 of top European shares rose
0.84 percent for the week. The index hit its highs after a move
by China to inject money into financial markets eased concerns
about a credit crunch that could hamper growth, and on some
strong earnings results.
    Investors also poured cash into bond funds. Taxable bond
funds attracted $3.1 billion in new cash, marking their third
straight week of inflows. Funds that mainly hold U.S. Treasuries
attracted $47 million in new cash, marking their first inflows
since last November.
    The yield on 10-year U.S. Treasury notes fell just 2 basis
points to 2.86 percent throughout the week after economic data
on U.S. housing starts in December, industrial output, and
inflation came in as expected. Bond yields move inversely to
their prices.
    Funds that hold corporate investment-grade bonds raked in
$1.75 billion, marking the 12th straight week of new cash into
the funds. Inflation-protected bond funds attracted a meager $21
million, still marking the first new demand for the funds since
April of last year.
    Low-risk money market funds, which typically invest in
short-term securities, attracted $12.3 billion in new cash after
investors pulled $15.6 billion from the funds the previous week.
    Some investors likely decided to park cash in money market
funds over the period on uncertainty as to how markets would
play out over a holiday-shortened week, Roseen said. 
    Commodities and precious metals funds, which mainly invest
in gold futures, attracted $335 million, marking their first
inflows since last September. The inflows came even as the spot
price of gold slipped about 1 percent on Jan. 21, the most since
the year began. 
    "People may have seen some buying opportunities after gold
and natural resources took a beating last year," said Roseen.
Bullion posted its worst annual decline in 2013 in more than 30
years.
    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        3.757      0.10     3,932.109   10,581
 Domestic Equities       1.070      0.04     2,935.772   7,787
 Non-Domestic Equities   2.687      0.27     996.338     2,794
 All Taxable Bond Funds  3.077      0.18     1,675.693   5,303
 All Money Market Funds  12.297     0.51     2,410.744   1,331
 All Municipal Bond      0.086      0.03     275.028     1,410
 Funds