NEW YORK Investors worldwide poured $17.9 billion into stock funds and $3.1 billion into high-yield bond funds in the week ended August 20, indicating a rebound in risk appetite, data from a Bank of America Merrill Lynch Global Research report showed on Friday.
The net inflows into stock funds were the biggest since October 2013, while the inflows into high-yield bond funds were the first in six weeks, according to the report, which also cited data from fund-tracker EPFR Global.
The inflows into funds that hold riskier assets came after investors pulled $16.3 billion out of stock funds and a record $11.4 billion out of high-yield bond funds during the first week of August amid selling pressure on the assets.
"There was a pretty sharp selloff in the high-yield market," said Michael Jones, chief investment officer of RiverFront Investment Group in Richmond, Virginia. "The fund flows are absolutely reflective of how people saw it as an opportunity" to increase exposures, he said.
Jones said the latest inflows into stock funds also showed investors' risk appetite and that his firm bought more high-yield bonds and stocks after the selloff earlier this month.
Funds that specialize in U.S. equities attracted $12.8 billion of the net inflows into stock funds, marking their strongest demand since September 2013. Funds that hold Japanese stocks attracted just $100 million, down from sizable inflows of $1.8 billion the prior week.
Emerging markets equity funds attracted $3.7 billion, their 11th straight week of new money.
European stock funds posted $600 million in outflows, however, their 7th straight week of withdrawals, or the longest such streak since May 2013.
Stock indexes worldwide rallied over the period. The benchmark U.S. S&P 500 .SPX rose over 2 percent, while MSCI’s all-country equity index .MIWD00000PUS rose 1.6 percent.
Bond funds overall attracted $9.9 billion in net new cash, marking their biggest inflows since February. Funds that mainly hold safe-haven U.S. Treasuries attracted $3.5 billion, marking their 7th straight week of new demand and also their biggest inflows since February.
"Treasuries are a carry trade - you pick up yield coming into the U.S.," said Kathleen Gaffney, co-director of investment-grade fixed income at Eaton Vance in Boston, in reference to higher yields on U.S. government bonds versus bonds in regions such as Europe.
Funds that hold floating-rate loans posted $600 million in outflows, marking their sixth straight week of outflows, while emerging market bond funds posted $94 million in outflows. That was their third straight week of withdrawals.
Commodities funds attracted $700 million in new cash, their biggest inflows in six weeks.
Analysts have cited excessive prices on floating-rate loans as a reason for recent withdrawals. The inflows into commodities funds came after gold prices fell on Aug. 20 following the minutes from the Federal Reserve's latest meeting.
(Reporting by Sam Forgione; Editing by Chizu Nomiyama and Nick Zieminski)