By Sam Forgione
NEW YORK, Nov. 8 U.S.-based investment-grade
corporate bond funds attracted the most new money in a single
week in nearly 21 years as the U.S. presidential election and
Europe's troubles shook markets, data from Thomson Reuters'
Lipper service showed on Thursday.
The funds attracted $2.74 billion in new cash, a record high
after slight inflows of $290.1 million the previous week.
Investors gave just $81.6 million to riskier high-yield
corporate bond funds.
Bond exchange-traded funds and mutual funds combined took in
$6.14 billion in inflows in the week ended November 7, the most
new money for the funds since late January. Investors favored
bond mutual funds, to which they gave $4.45 billion.
ETFs are generally believed to represent the investment
behavior of institutional investors, while mutual funds are
thought to represent the retail investor.
Investors also opted for safety in U.S. Treasuries and gave
$1.08 billion to funds that hold them, the most new money since
Stock funds still saw demand, however, and pulled in $4.92
billion in new money with $4 billion of the cash going into
ETFs, the most in seven weeks.
The benchmark S&P 500 fell 1.25 percent over the
reporting period amid disappointing company revenue reports and
renewed concerns about the "fiscal cliff" of spending cuts and
tax increases after the reelection of U.S. President Barack
Obama. The European Commission's statement that the euro zone
would barely grow next year also dragged on stocks.
Investor bets on a win for Republican challenger Mitt Romney
and Democrat incumbent Obama led to the demand for both stock
and bond funds, said Lemieux.
Many investors believed a Romney win would boost stocks
given his pro-business attitude while an Obama win would spur a
bond rally given his plan to support the status quo of low-rate
Much of the reporting period included the run-up to
President Obama's reelection early Wednesday morning. At the
close of Wednesday trading, the S&P 500 had fallen 2.37 percent
with heavy declines in financial and energy shares.
Mutual funds that hold foreign stocks had inflows of $1.56
billion, the most since mid-April, while mutual funds that hold
U.S. stocks had outflows of $640 million.
Retail investors favored emerging market stock funds, said
Lemieux, which they think offer the best growth potential.
Money-market funds had inflows of $31.07 billion, the most
since August of last year and reversing large outflows $23.5
billion the previous week.
Institutional investors may have decided to reinvest in the
funds after taking money out during the two-day market
disruption from Superstorm Sandy, Lemieux said.
The weekly Lipper fund flow data is compiled from reports
issued by U.S.-domiciled mutual funds and exchange-traded funds.
The following is a broad breakdown of the flows for the
week, including exchange-traded funds (in $ billions):
Sector Flow Chg % Assets ($Bil) Count
All Equity Funds 4.916 0.17 2,820.721 9,943
Domestic Equities 2.621 0.12 2,119.442 7,364
Non-Domestic 2.294 0.33 701.279 2,579
All Taxable Bond 6.139 0.41 1,490.841 4,600
All Money Market 31.071 1.37 2,300.564 1,391
All Municipal Bond 0.866 0.27 318.636 1,339