US bond funds see biggest ever qtrly inflow in Q2
NEW YORK, July 14 (Reuters) - Yield-hungry investors poured nearly $90 billion into U.S. bonds funds during the second quarter, the biggest quarterly inflow ever for the sector, according to a report on Tuesday.
The latest figures by Strategic Insight underscore how far investors have fled from risk particularly since the credit crisis began in earnest nearly two years ago.
"There was a greater willingness to finally act on the part of investors instead of letting money sit in cash and near-zero yielding cash instruments," Avi Nachmany, Strategic Insight's director of research, said in an interview.
Most of the nearly $90 billion went into taxable bond funds. Nachmany said the rally since the 12-year low on March 9 set off an appetite for risk-taking. In fact, the Standard & Poor's 500 index .SPX, for example, rose more than 15 percent during the second quarter.
"There was complete panic earlier this year and then the psychology changed when markets began rallying," he added. High-yield distressed bonds have returned 48.7 percent so far this year, according to Merrill Lynch data.
U.S. stock funds were no slouch either.
In the second quarter, equity funds took in an estimated $47 billion in net new flows, according to Strategic Insight. Investors put about one-third of equity-fund flows into international stock funds, a trend that gained momentum in June on the back of rising international stock prices, Nachmany added.
All told, investors put $136 billion into bond and stock mutual funds during the second quarter, which generated the best quarter for long-term fund inflows in more than two years, Strategic Insight added. (Reporting by Jennifer Ablan; Editing by Theodore d'Afflisio)
