(Adds additional flows, investor comments)
By Sam Forgione
NEW YORK Aug 22 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
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 rose over 2 percent, while MSCI's
all-country equity index 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