* Emerging market stock funds drew $4.17 bln in latest week
* Institutional investors pulled $1.28 bln from stock ETFs
By Sam Forgione
NEW YORK, Jan 25 Investors pumped $5.65 billion
into stock funds worldwide in the latest week, with most of the
sum flowing into emerging market stock funds as investors exited
U.S. exchange-traded funds, data from EPFR Global showed on
Funds that hold emerging market stocks captured $4.17
billion of the total sum into equity funds in the week ended
January 23, while institutional investors pulled $1.28 billion
out of U.S. stock ETFs, the fund-tracking firm said.
"There is more to be afraid of in the U.S. and Europe,
superficially, than there is in the emerging markets," said
Michael Jones, chief investment officer of RiverFront Investment
Group. Jones emphasized lower debt levels in emerging market
Retail investors, however, put $340 million into U.S. stock
funds, the third straight week of commitments from mom-and-pop
investors, EPFR Global added. This marks the longest streak of
commitments from retail investors since February of 2011, the
data firm said.
Investors worldwide have shown greater zeal for stocks this
year. In the first full week of the year, $22.2 billion flowed
into stock funds, which was the most since late September of
2007. Total inflows fell to $7.19 billion the following week,
but remained substantial with the latest week's gains.
"I think the outlook for the overall economy looks fairly
robust," said Anthony Conroy, head trader for BNY ConvergEx, an
affiliate of the Bank of New York.
"Equities are underowned, and I think we're going to see
that trend continue of inflows into equities out of bonds," he
Bond funds still attracted fans with inflows of $3.71
billion in the latest week. Funds that hold U.S. bonds gained
$1.63 billion of that sum, while emerging market bond funds
attracted $1.38 billion.
The benchmark S&P 500 rose 1.5 percent over the
reporting period. Signals that Republican leaders would pass a
nearly four-month extension of the U.S. debt ceiling, upbeat
data on U.S. unemployment claims, and strong earnings from
technology companies boosted sentiment.
The benchmark 10-year Treasury fell in price to yield 1.88
percent last Thursday after the positive unemployment report and
strong results from a Spanish bond auction. The yield on the
safe-haven bond rose to 1.95 percent on Friday on solid U.S.
corporate earnings and news that European banks will repay more
cash from crisis loans earlier than expected.
Funds that hold European bonds suffered $53 million in
outflows over EPFR Global's weekly reporting period, while
European stock funds had inflows of $573 million, modestly less
than the prior week's gains of $840 million.
Appetite also cooled somewhat toward high-yield "junk" bond
funds, which attracted $615 million, or just under half of the
$1.12 billion in inflows the funds gained the prior week.
"The upside is not nearly as good as it has been," said
Jones of RiverFront on high-yield bonds, with regard to their
lower yields after swooning demand for the securities last year.