| NEW YORK
NEW YORK Jan 18 Fund investors committed $7.19
billion to stock funds worldwide in the latest week, but most of
it went into emerging markets as the investors soured on funds
that hold U.S. stocks, data from EPFR Global showed on Friday.
Emerging market stock funds attracted $5.83 billion of the
net new cash in the week ended Jan. 16. Meanwhile, investors
pulled $1.79 billion out of U.S. stock funds, the fund-tracking
Demand for stocks, broadly speaking, has rebounded so far
this year, with the latest inflows marking the second straight
week in which retail investors contributed new money. That has
not occurred since April 2011, EPFR Global said. Last year,
investors pulled $69.1 billion out of all stock funds while
pouring $493.6 billion into bond funds, the firm added.
Investors favored bonds in 2012 for their safety and stable
returns in light of concerns such as the European debt crisis
and U.S. budget talks. Still, the S&P 500 rose 13 percent
The fresh money into emerging market stock funds is modestly
lower than the record $7.39 billion the funds received the
previous week. The outflows from U.S. stock funds, however, mark
a sharp reversal from inflows of $10.35 billion the prior week,
and amount to the biggest cash losses in six weeks, EPFR Global
On Thursday, Lipper reported inflows of $3.75 billion into
stock mutual funds over the same reporting period. The fund
research company's weekly figures for ETFs and mutual funds only
apply to funds that are based in the United States, whereas EPFR
Global tracks funds ranging from ETFs to hedge funds located
around the world.
"People are now willing to move out the risk curve and
invest in more volatile assets like emerging markets," said
Robert Francello, head of equity trading for Apex Capital in San
Francisco, with regard to the preference for emerging market
Bond funds globally, meanwhile, still found strong demand
with inflows of $6.95 billion, the most in ten weeks. U.S. bond
funds made up roughly half of that inflow with $3.51 billion in
new cash, the most in nine weeks according to the firm.
The S&P 500 rose a slight 0.8 percent over the reporting
period. Federal Reserve Presidents James Bullard, Charles
Plosser and Charles Evans made optimistic forecasts on U.S.
economic growth for 2013, while upbeat U.S. retail sales for
December and strong corporate earnings for banks JP Morgan Chase
and Goldman Sachs boosted sentiment.
Investors remained cautious, however, in light of Republican
opposition in Congress to increase the $16.4 trillion U.S. debt
ceiling. A failure to raise the government's borrowing limit
could cause the U.S. to default on its debt in coming months.
Concerns over the debt ceiling fueled demand for the
safe-haven 10-year Treasury, which rose in price to yield 1.82
percent on Wednesday. A report on Friday showing U.S. consumer
sentiment fell in January drove further demand, keeping the
yield at 1.85 percent in intraday trading.
Investors gravitated toward riskier bonds over the reporting
period and gave $1.12 billion to high-yield "junk" bond funds,
which was modestly less than inflows of $1.66 billion the prior
week. Emerging market bond funds also captured $2.02 billion in
new demand, which was nearly a third of the inflows into the
countries' stock funds.
"Investors are hungry for yield," said Steven Bleiberg, head
of asset allocation at Legg Mason. "This is exactly what the
central banks are trying to accomplish," he added in reference
to the Fed's attempts to encourage riskier investing by keeping
benchmark interest rates low.
European assets also gained some favor, with investors
putting $840 million into European stock funds and $542 million
into European bond funds, EPFR Global said.