UPDATE 1-Stock funds worldwide attract $11 bln, most in five weeks - BofA

Fri May 16, 2014 11:08am EDT

(Adds more flow information, market performance, trader quote; byline)

By Sam Forgione

NEW YORK May 16 (Reuters) - Fund investors worldwide poured $11 billion into stock funds in the week ended May 14 after U.S. stock indexes hit record highs, data from a Bank of America Merrill Lynch Global Research report showed on Friday.

The net inflows into stock funds were the biggest in five weeks. U.S.-focused stock funds attracted $6 billion of the net inflows, all into exchange-traded funds, according to the report, which also cited data from fund-tracker EPFR Global.

ETFs investment flows are thought to reflect institutional investor preferences.

Stock funds specializing in non-U.S. equities also attracted new cash. Funds that specialize in emerging markets stocks attracted $500 million in inflows, reversing $700 million in outflows over the prior week. Japanese stock funds also attracted $500 million, marking their biggest inflows in four weeks.

The inflows into U.S.-focused equity funds showed stock market investors chasing record highs.

The S&P 500 and Dow benchmark indexes closed at a new peak 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 in the week ending May 14.

"People are putting their money into any place in order to get yield, and the U.S. stock market is probably the only place they can find it," said Robert Francello, head trader at Apex Capital in San Francisco.

Worldwide, investors still sought bonds and poured $6.8 billion into the funds, marking their 10th straight week of inflows. Riskier high-yield bond funds attracted $1.2 billion, marking their 14th straight week of inflows, while emerging markets debt funds attracted $1.1 billion, marking their 7th straight week of inflows.

The latest week also showed investors putting cash to work. Investors pulled $4.9 billion out of low-risk money market funds, which are viewed as a safe place to park cash.

Despite the hefty inflows into stock funds over the latest week, inflows into bond funds have outpaced inflows into stock funds so far this year. Bond funds have attracted $80 billion in new cash, while stock funds have attracted $53 billion, according to the report.

Along with the gains in U.S. stocks, bond prices rose over the weekly period. 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.

Globally, investors have poured cash into bond funds this year to chase outperformance in debt markets, analysts have said. The benchmark Barclays U.S. Aggregate bond index has risen 3.6 percent so far this year through Thursday, while the benchmark S&P 500 stock index has risen just 1.2 percent over the same period. (Reporting by Sam Forgione; Editing by James Dalgleish and W Simon)

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