By Sam Forgione
NEW YORK, November 29 Investors in U.S.-based
funds have pumped the most new money into stock exchange-traded
funds since mid-September, while adding to bond funds amid
growing optimism U.S. lawmakers will avoid the looming "fiscal
cliff" of tax hikes and spending cuts.
Data from Thomson Reuters' Lipper service showed on Thursday
that Stock ETFs raked in $7.66 billion in new investor cash in
the week ended Nov. 28, the most money since the week the U.S.
Federal Reserve announced its extended stimulus plan.
Meanwhile, bond mutual funds and ETFs combined attracted
$1.81 billion in investor cash, the most in three weeks and more
than doubling the previous week's inflows of $670.57 million.
A large percentage of equity demand flowed into the SPDR S&P
500 ETF fund, which attracted $3.64 billion in cash,
while investors latched onto emerging market stocks by pumping
$1.37 billion into the iShares:MSCI Emerging Market fund.
Stock mutual funds, however, suffered outflows for the third
straight week as retail investors took $280.72 million out of
the funds. The amount still reflects an improvement from the
previous week, when investors took $2.89 billion out of the
funds, which was the most since early August.
ETFs are generally believed to represent the investment
behavior of institutional investors, while mutual funds are
thought to represent the retail investor.
The benchmark S&P 500 stock index rose 1.36 percent
over the reporting period, despite uncertainty over whether U.S.
President Barack Obama and Congress would reach a deal on the
budget. President Obama's statement on Wednesday that he hoped
to close a deal in four weeks boosted markets.
"There's hope that the 'fiscal cliff' (deal) will be reached
sooner than later," said Jeff Tjornehoj, head of Lipper Americas
Research, who also said the optimism spurred the inflows into
Among bond funds, investors favored higher-quality debt and
poured $965.62 million into investment-grade corporate bond
funds, which accounted for more than half of the overall inflows
into bond funds.
Investors who are "slow to accept the trend" into stocks
favored investment-grade corporate bonds, said Tjornehoj.
Funds that hold U.S. Treasuries, meanwhile, had outflows of
$208.3 million, the first loss in demand in four weeks.
"As (investors) look more approvingly at equities, they show
less preference for safer assets such as Treasuries," 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 Assets Count
All Equity Funds 7.379 0.26 2,842.856 10,000
Domestic Equities 4.923 0.23 2,131.643 7,408
Non-Domestic Equities 2.456 0.35 711.213 2,592
All Taxable Bond Funds 1.806 0.12 1,496.501 4,671
All Money Market Funds 11.383 0.49 2,331.338 1,394
All Municipal Bond Funds 0.545 0.17 323.562 1,339