| NEW YORK
NEW YORK Dec 14 Investors poured fresh money
into stock funds worldwide with an emphasis on exchange-traded
funds that hold foreign stocks as the end of the year
approaches, data from EPFR Global showed on Friday.
Stock funds worldwide attracted $8.88 billion in new money
in the week ended December 12, dwarfing the previous week's
inflows of $2.3 billion but falling short of the massive $14.86
billion the funds received in the last week of November, the
fund-tracking firm said.
Bond funds worldwide still pulled in $5.24 billion in net
new cash, the most since mid-November, with chunks of that total
flowing into European, emerging market, and high-yield "junk"
Stock ETFs attracted over $12 billion in new money, while
actively managed stock funds suffered outflows of $3.23 billion,
EPFR Global said. The inflows into ETFs show a high demand for
passive stock funds, largely on the part of institutional
investors, illustrating opportunistic buying.
As the end of the year approaches, investors are
acknowledging strong stock market performance worldwide this
year, said John Stoltzfus, chief market strategist at
Oppenheimer and Co.
Investors showed renewed appetite for ETFs that hold foreign
stocks and pumped $5.32 billion into emerging market stock
funds, the most in nearly a year. European stock funds also
attracted fresh demand with inflows of $1.6 billion, the most in
roughly three months according to the fund-tracker.
"There are European stocks that U.S. investors are looking
to own on expectations that those companies do a lot of business
with Asia and the U.S.," said Stoltzfus, and mentioned the
healthcare, consumer discretionary, and materials sectors.
Funds that hold Chinese stocks stood out with huge inflows
of $1.4 billion, the most in four years according to the
fund-tracker, with $1.3 billion of that sum flowing into ETFs
that hold Chinese stocks.
Upbeat data over the week showed that factory output in
China, the world's second-biggest economy, accelerated to its
highest in eight months in November.
The benchmark S&P 500 stock index rose 1.36 percent
over the reporting period, despite a lack of progress in
negotiations between U.S. President Barack Obama and Congress
over the looming "fiscal cliff" of tax increases and spending
On Wednesday, the final day of EPFR Global's reporting
period, the Federal Reserve ramped up its monetary stimulus
program and committed to monthly purchases of $85 billion in
Treasuries and mortgage-backed bonds in an effort to spur
economic growth. The Fed also specified that interest rates
would remain near zero until unemployment falls to at least 6.5
The yield on the benchmark 10-year Treasury fell to 1.59
percent on December 6 on expectations that the Fed's
policy-setting panel would announce its extended stimulus plan
after a two-day meeting. The yield on the safe-haven bond has
since risen to 1.71 percent in intraday trading Friday.
The inflows into emerging market stock funds over the week
trounced a $1.66 billion inflow into U.S. stock funds, which
still showed an improvement after the U.S. funds suffered
outflows of $2.41 billion the previous week.
As with stock funds, investors favored bond funds that hold
non-U.S. assets. Emerging market bond funds attracted $1.6
billion in new cash over the period, while European bond funds
attracted $1.07 billion.
Inflows of $1.68 billion into high-yield "junk" bond funds
also showed investors' willingness to take risk over the week.
Investors tend to seek high-yield and stocks at the same
time, said Wayne Kaufman, chief market analyst at John Thomas
Financial, and could be adding to their bets on the risk assets.
"People have just been dramatically underinvested in
equities, and if equities do have that strong correlation with
junk bonds, then they've probably been relatively underinvested
in junk bonds also," Kaufman said.