Feb 22 Fund investors worldwide turned positive
on higher-yielding assets in the latest week, yanking $32
billion in money market funds and pouring $8.58 billion in
equity funds, data from EPFR Global showed on Friday.
Funds that hold U.S. stocks enjoyed net inflows of $2.24
billion, a reversal of last week's outflows of $3.62 billion, in
the week ended Feb. 20, the fund-tracking firm said.
Additionally, high-yield junk bond funds attracted inflows
of $135 million in the latest week, up from last week's outflows
of $207 million.
"I'm seeing a 'Great Shift' rather than a 'Great
Rotation'-mainly because rotation means actively moving out of
bonds and into stocks," said Cameron Brandt, director of
research at the firm. "I see a greater relative share of new
money going into equities."
The so-called Great Rotation out of expensive, low-yielding
bonds back into undervalued equity has been much-debated since
the beginning of the year. The appetite, or lack thereof, for
equities serves as an important barometer of investor confidence
and how people feel about the state of economic growth.
Brandt told Reuters that he estimates roughly $12 billion of
outflows from money market funds found their way into
higher-yielding assets including equities and high-yield junk
Equity markets have surged as major central banks have
repeatedly delivered monetary support to vulnerable economies.
The injection of liquidity has been credited with driving
investments in riskier assets.
So far this year, the Standard & Poor's 500 index is
up 5.68 percent.
Rising confidence in economic growth prospects are also
drawing investors into the market.
"The animal spirits are being rekindled," said Kathleen
Gaffney, the highly-regarded portfolio manager at Eaton Vance.
Gaffney cites merger-and-acquisition activity as well as
capital spending trends.
A Thomson Reuters analysis shows that for 2013, more
Standard & Poor's 500 firms are forecasting capital expenditures
that exceeded analysts' expectations than at any time in the
past four years. Recent U.S. government data showed a rise in
equipment and software spending in the final quarter of
Gaffney added that she wouldn't be surprised if worldwide
equities outperformed this year as interest-rate risk could
pressure fixed-income markets.
Emerging market equity funds attracted inflows of $2.2
billion in the latest week while European equity funds saw
inflows of $1.46 billion, up from last week's outflows of $38
According to EPFR, the $32 billion of outflows from money
market funds are the most in 35 weeks. U.S. money market funds
accounted for $25.8 billion of that, the biggest since the
middle of 2011, Brandt added.
All told, all bond funds still found fans. Inflows were
$3.47 billion, up from last week's inflows of $2.58 billion. For
their part, U.S. bond inflows were $1.77 billion, down from last
week's inflows of $2.28 billion.
"The hunger for yield has never been stronger," Brandt