By Sam Forgione
NEW YORK, July 19 Investors worldwide poured
$19.7 billion into stock funds in the latest week as U.S. stocks
hit record highs, fund-tracking firm EPFR Global said on Friday.
The inflows into all stock funds in the week ended July 17
were the largest in six months, said EPFR Global. Most of the
new cash went into funds that hold U.S. stocks, which gained
$16.96 billion, the most since June 2008.
The S&P 500 and Dow Jones industrial average
hit record highs for three consecutive sessions at the start of
the week on strong corporate earnings and hints that the Federal
Reserve's stimulus is unlikely to slow soon. The S&P 500 rose
1.7 percent over the weekly period.
Fed Chairman Ben Bernanke boosted the appetite for stocks
when he said on July 10 that the central bank needed to keep its
bond buying in place given low inflation and a 7.6 percent
unemployment rate that "if anything overstates the health of the
"The most recent remarks Bernanke made has made it very
clear to everyone that they're not in a hurry to taper," said
Richard Sichel, chief investment officer of Philadelphia Trust
Co. He said Bernanke's comments likely helped drive demand for
stock funds over the week.
Investors have poured $38 billion into stock funds so far in
July, reversing $15.7 billion in outflows from the funds last
month, EPFR Global said.
The Fed's $85 billion in monthly purchases of Treasuries and
agency mortgage securities have been a major source of support
for both stock and bond markets.
The stimulus has helped lift the S&P 500 over 18 percent
this year. Investors fretted when Bernanke told Congress on May
22 that the Fed could reduce its bond buying later this year.
Bernanke's comments in late May caused a broad credit market
selloff, and the yield on the benchmark 10-year U.S. Treasury
has risen 87 basis points to 2.49 percent since May 2. As yields
rise, prices fall.
Among international stock funds, Japanese equity funds
gained $871 million in the latest week, while emerging market
stock funds gained a meager $8 million. Japan's Nikkei average
stock index rose 1.4 percent over the weekly period.
In the latest week, bond funds worldwide suffered outflows
of just $670 million, the fund-tracker said. That marked an
improvement from the previous week, when investors pulled $2.69
billion from the funds.
U.S. bond funds, however, saw inflows of $441 million over
the weekly period, according to the Cambridge,
Massachusetts-based EPFR Global.
Investors sought funds that hold riskier high-yield junk
debt, which attracted $4 billion in new cash, their largest
weekly inflow since October 2011, according to EPFR Global.
Funds that hold municipal bonds suffered outflows of $1.7
billion over the week, the most in three weeks according to the
fund-tracker. Emerging market debt funds, meanwhile, had
outflows of $1.3 billion, EPFR Global said.
Funds that hold Treasuries also suffered outflows of $1.1
billion, EPFR Global said, even as prices rose on the benchmark
10-year Treasury. The yield on the safe-haven bond fell 18 basis
points to 2.49 percent over the reporting period. When yields
fall, prices rise.
Funds that hold Treasury Inflation-Protected Securities or
TIPS saw continued outflows of $357 million in the latest week
after outflows of $256 million the previous week.
Floating-rate bank loan funds gained inflows of $1.8
billion, a record according to EPFR Global, which began tracking
the funds in January 2007. Floating-rate loans are protected
from rising interest rates by being pegged to floating-rate