UPDATE 1-U.S.-based stock funds attract $9.7 bln, most since March -Lipper

Thu May 15, 2014 6:30pm EDT

(New throughout, adds analyst comment, market performance,
table)
    By Sam Forgione
    NEW YORK, May 15 (Reuters) - Investors in U.S.-based funds
poured $9.7 billion into stock funds in the week ended May 14,
the biggest inflows since early March after U.S. stock indexes
touched record highs, data from Thomson Reuters' Lipper service
showed on Thursday. 
    Stock exchange-traded funds attracted $7.9 billion of the
net inflows, while stock mutual funds attracted $1.8 billion.
Mutual funds are commonly purchased by retail investors, while
ETFs are thought to represent the institutional investor. 
    "The market is getting a little extended, but certainly
people are seeing new records being made, and they want to
participate," said Tom Roseen, head of research services at
Lipper.
    The S&P 500 and Dow ended at record highs on
May 12 in a broad rally spurred by strong corporate results and
an improving economic outlook. The S&P 500 rose 0.5 percent over
the weekly period.
    Taxable bond funds attracted $4.4 billion in new money,
marking their 10th straight week of inflows. Funds that
specialize in emerging markets debt attracted $316 million in
inflows, marking their first inflows in four weeks.
    Investors are still concerned about global economic growth
and sought a degree of safety in bonds, while others have been
forced to cover short positions against U.S. Treasuries as
interest rates have fallen, said Roseen of Lipper. 
    U.S. Treasuries yields fell to six-month lows on May 14
after expectations that the European Central Bank would cut
interest rates sparked a global fixed-income rally. 
    Benchmark 10-year Treasuries yields fell as low as 2.525
percent, the lowest since Oct. 31, breaking below resistance at
around 2.56 percent. 
    Floating-rate loan funds, which are protected from rising
interest rates by being pegged to floating-rate benchmarks,
posted $259 million in outflows after attracting $69 million in
inflows the prior week. 
    "The fear of an imminent interest rate increase has faded,"
said Roseen. He said investors largely anticipate that the
Federal Reserve will keep short-term interest rates low over the
near term. 
    The latest week showed investors pulling a small amount of
cash out of low-risk money market funds, which typically invest
in safe short-term securities. The funds posted $72 million in
outflows after attracting a sizeable $17.8 billion in inflows
the prior week. 
    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
                       ($Bil)               ($Bil)      
 All Equity Funds      9.708      0.24      4,042.942   10,734
 Domestic Equities     7.334      0.25      2,979.447   7,826
 Non-Domestic          2.375      0.23      1,063.494   2,908
 Equities                                               
 All Taxable Bond      4.428      0.25      1,778.153   5,447
 Funds                                                  
 All Money Market      -0.072     -0.00     2,299.725   1,317
 Funds                                                  
 All Municipal Bond    0.616      0.21      290.202     1,443
 Funds                                                  
 
 (Reporting by Sam Forgione; Editing by Bernard Orr and David
Gregorio)
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