By Sam Forgione
NEW YORK, Dec 6 Investors in U.S.-based funds
pulled the most money out of stock mutual funds this year in the
past week, possibly out of concern that taxes on capital gains
could rise in 2013, data from Thomson Reuters' Lipper service
showed on Thursday.
Stock mutual funds suffered outflows of $4.14 billion in the
week ended Dec. 5, the most since December of last year. Stock
ETFs, however, raked in $7.69 billion in new cash, with the SPDR
S&P 500 ETF fund topping demand with inflows of $3.18 billion.
Retail investors are concerned about the prospect of higher
taxes on capital gains and could be taking profits from stock
mutual funds, said Lipper analyst Matthew Lemieux.
Investors in ETFs, meanwhile, "don't seem to have the same
concerns as mutual fund investors," said Lemieux.
Overall, stock funds had net inflows of $3.55 billion, less
than half the previous week's inflows of $7.38 billion.
ETFs are generally believed to represent the investment
behavior of institutional investors, while mutual funds are
thought to represent the retail investor.
Bond funds had inflows of $1.18 billion, modestly trailing
the previous week's inflows of $1.81 billion. Aside from a
meager $8.2 million into bond ETFs, all of the inflows were into
bond mutual funds.
The benchmark S&P 500 index fell 0.33 percent over
the reporting period as negotiations between U.S. President
Barack Obama and Congress over the looming "fiscal cliff" of
roughly $600 billion in tax increases and spending cuts
Toward the end of the reporting period, President Obama told
Bloomberg Television that a Republican proposal to resolve the
crisis was "out of balance" and said any deal must include a
rise in income tax rates on the wealthiest Americans.
Despite negative reactions in the stock market, investors
showed greater appetite for risk in high-yield corporate bonds
and invested $653.2 million into funds that hold the bonds,
above the $532.9 million invested in higher-quality
investment-grade corporate bond funds.
Funds that hold safe-haven U.S. Treasuries, meanwhile, had
outflows of $320.26 million, the most since late October.
Investors also parked a massive $29.7 billion in low-risk
Investors may be aiming for extra yield before the end of
the year, while also using money market funds as a way to store
cash, said Lemieux.
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 3.554 0.13 2,861.014 10,045
Domestic Equities 2.477 0.12 2,136.817 7,446
Non-Domestic Equities 1.077 0.15 724.197 2,599
All Taxable Bond Funds 1.188 0.08 1,505.007 4,704
All Money Market Funds 29.702 1.28 2,358.373 1,388
All Municipal Bond Funds 0.489 0.15 324.993 1,342