NEW YORK Feb 14 Fund investors worldwide
committed $11.5 billion to stock funds in the week ended
Wednesday on reassurance from Federal Reserve chair Janet Yellen
that the U.S. economy was on a better track, data from a Bank of
America Merrill Lynch Global Research report showed on Friday.
The inflows in the week ended Feb. 12 reversed the prior
week's record cash outflows of $28.3 billion, data from the
report, which also cited data from fund-tracking firm EPFR
Funds that specialize in U.S. stocks attracted $7 billion in
new cash, reversing the prior week's record cash outflows of $24
billion. Funds that hold European stocks also garnered demand
with inflows of $4 billion, marking their 33rd straight week of
The inflows into stock funds came after Yellen, in her first
public comments as Fed chief on Feb. 11, emphasized continuity
in the U.S. central bank's policy strategy of cutting asset
purchases by $10 billion a month.
"Yellen pretty much laid out a steady-as-she-goes outlook
for monetary policy," said Omer Esiner, chief market analyst at
Commonwealth Foreign Exchange in Washington. "The markets were
encouraged by that."
U.S. stocks rallied on Yellen's comments, with investors
interpreting the reduced need for the Fed's bond-buying as a
positive sign for the U.S. economy.
The benchmark Standard & Poor's 500 stock index
rallied 3.9 percent over the reporting period.
Investors continued to pull cash out of emerging market
stock funds, which posted outflows of $3.1 billion, extending
their record outflow streak to 16 straight weeks.
The outflows came as fears of a protracted capital flight
out of emerging market assets, while subdued, remained in
investors' minds in the latest week.
Bond funds worldwide attracted $4.7 billion in new cash,
marking the second straight week of inflows after record cash
inflows of about $15 billion in the previous week.
The inflows came despite losses on benchmark U.S. Treasuries
The yield on the 10-year U.S. Treasury note rose 14 basis
points to 2.76 percent over the weekly period after Yellen's
comments, some positive U.S. jobless data, and a U.S. debt
ceiling deal limited demand for safe-haven bonds. Bond yields
move inversely to their prices.
"The inflows into bond funds reflect continuing concern over
the risks of the equity market having a correction," said
Margaret Patel, senior portfolio manager at Wells Capital
Funds that mainly hold safe-haven U.S. Treasuries attracted
$1.6 billion in new cash after big inflows of $13.2 billion in
the previous week, data from the report showed.
Investors showed their risk appetite by committing $1.8
billion to riskier high-yield bond funds, marking their first
inflows in three weeks.
Funds that hold investment-grade corporate bonds, which are
deemed safer than high-yield bonds because they sport
higher-quality credit ratings, attracted $2.5 billion in new
cash, marking their 8th straight week of inflows.
"From a total return basis, investment-grade bonds have been
pretty decent," said Patel of Wells Capital Management.
The Barclays U.S. Aggregate bond index, which tracks the
performance of U.S. dollar-denominated investment-grade bonds,
is up 1.52 percent this year.