* Investors withdraw $7.5 bln from European money market
* U.S bond funds gain $3.34 bln
* High yield funds have inflows of $1.54 bln
By Katya Wachtel
NEW YORK, June 22 Even as a conservative,
pro-bailout party won the Greek election and quieted fears that
the nation would exit the euro zone, anxious investors withdrew
billions from European money market and bond funds and sought
safety in the United States in the latest week, data for EPFR
Global showed on Fr ida y.
Investors pulled $7.5 billion from European money market
managers in the week ending June 20, and withdrew $886 million
from European bond funds after removing over $1 billion from
those managers the previous week. Redemptions from German bond
funds reached a 12-week high.
"Growing uncertainty around successful interventions by the
European Commission, the strength of European banks and progress
in fiscal management of Greece and Spain all weigh on
investors," said J.R. Rieger, vice president of Fixed Income
Indices at Standard and Poor's, commenting on the flight of cash
from Europe in the latest week.
Money Market Funds overall recorded their biggest outflow
since the first week of last August, with outflows of $33.43
"Money market funds are vehicles used to store cash, and
with investors afraid that the banks in Europe could be in
trouble, the flight out of those money market funds is
pre-emptive - investors want to make sure their money is in a
safe place," said Leon Mirochnik, vice president at TrimTabs
EPFR cited concerns about exposure to Euro zone debt, the
need to meet quarterly U.S. tax payments and fears that already
minimal returns will be driven lower by additional quantitative
easing led as reasons for such significant money market
The beneficiaries of investor unease over Europe were U.S
bond funds, which gained $3.34 billion after a drop the prior
week, and high yield funds, which had $1.58 billion in inflows,
a seven-week high.
Mortgage backed funds took in $444 million, while municipal
bonds funds gained $618 million.
TrimTab's Mirochnik said investor appetite for riskier
assets may have been due in the latest week to an expectation
that the U.S Federal Reserve was going to extend its monetary
program of buying and selling short-term and long-term bonds,
known as Operation Twist.
U.S stock funds gained $669 million in investor money - the
first consecutive weekly inflow into that category since
"U.S. corporations have cash heavy balance sheets and
defaults have been low in the high yield arena," Standard and
Poor's Rieger noted.
Meanwhile, funds that focus on stocks in the developed
European countries had withdrawals of $216 million, the fifth
consecutive week of redemptions. But investors were more
confident in German equities, sending $869 million in new
capital to those funds.
SECTOR-SPECIFIC, AND BRIC FUNDS
Investors put $307 million into Brazil-focused funds in the
latest week, withdrew over $60 million from funds that
specialize in Russia and India and took $141 million from funds
focused on China. China equity funds recorded the eight straight
weeks of net redemptions, losing $1.3 billion.
Commodities funds gained $1.16 billion, helped by inflows of
$1.2 billion to gold and precious metal funds, a 20-week high.