By Sam Forgione
April 4 Investors in funds based in the U.S.
committed $2.24 billion to stock funds in the latest week as the
benchmark S&P 500 index touched a record high, data from
Thomson Reuters' Lipper service showed on Thursday.
In the week ended April 3, investors gave $3 billion to
stock mutual funds while pulling $751.9 million out of stock
exchange-traded funds. The total inflows of $2.24 billion were
the most in three weeks.
The modest boost in demand for stock funds overall came on
the heels of the S&P 500 hitting a record close high of 1,569.19
on March 28 after Cyprus's banks reopened to relative calm. The
S&P level also came three weeks after the Dow Jones industrial
average reached a record level.
"This is new money coming in from mom and pop investors,"
said Tom Roseen, head of research services at Lipper. "They
thought they missed the boat and they're trying to get back in."
The ongoing inflows into stock mutual funds this year mark a
turnaround in sentiment from 2012, when investors regularly
redeemed from the funds and sought safer returns in bonds on
fears of stock market volatility.
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.
Mutual funds that hold only U.S. stocks attracted $1.17
billion in new cash over the weekly period, up from inflows of
$640.4 million the prior week. ETFs that hold U.S. stocks,
meanwhile, had outflows of $383.52 million, up from outflows of
$136.9 million the previous week.
Among those outflows, the biggest loser was the SPDR Gold
Trust, which sustained an outflow of $761.7 million. The
iShares: Russell 2000 index was second after investors
redeemed $624.4 million.
ETFs are generally believed to represent the investment
behavior of institutional investors, while mutual funds are
thought to represent the retail investor.
Funds that invest in stocks outside of the United States
attracted $1.45 billion in new cash, a sharp rise after raking
in a small $236.5 million the prior week. Mutual funds that hold
those stocks attracted $1.82 billion, while ETFs suffered
outflows of $368.4 million.
The S&P 500 fell 0.6 percent over the entire reporting
period. After hitting a record high at the start of the week,
the index tumbled on Wednesday after the ADP National Employment
Report showed unexpectedly weak growth in U.S. private sector
jobs and services.
The report that U.S. companies hired at the weakest pace in
five months in March pushed the S&P down to close 1.05 percent
and stoked demand for the benchmark 10-year Treasury, which rose
in price to yield 1.82 percent.
Investors committed $2.45 billion in new cash to taxable
bond funds over the week, down from $3.85 billion the prior
week. Investors gave nearly $2 billion to bond mutual funds
while giving just $491.2 million to bond ETFs.
"I think there's been enough good news out there that people
aren't in panic mode anymore," said Lipper's Roseen on the lower
inflows into safer bond funds.
Investment-grade corporate bond funds saw a modest drop in
demand as investors committed $1.3 billion to the funds, down
from $1.57 billion the prior week and the least since the start
of the year.
Included in those inflows were cash gains of $848.4 million
into funds that hold corporate loans, which have "floating
rates" that protect against a rising interest rate environment.
That amount was the weakest turnout for the funds since
High-yield "junk" bond funds, meanwhile, attracted a meager
$32.1 million in new cash, down slightly from inflows of $34.1
million the previous week.
Flexible funds, which can invest in a wide variety of
securities from stocks and bonds to commodities and real estate,
attracted $1.27 billion in new cash over the week, down slightly
from $1.34 billion the prior week.
Money market funds, which are low-risk vehicles that invest
in short-term securities, attracted $1.21 billion in new money,
the most in five weeks.
"A lot of people are expecting a pullback in stock markets,
and so it does make sense to have a little bit of money on the
sidelines," said Roseen.
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 Count
($Bil) Assets ($Bil)
All Equity Funds 2.241 0.07 3,191.887 10,229
Domestic Equities 0.788 0.03 2,375.998 7,575
Non-Domestic Equities 1.453 0.18 815.889 2,654
All Taxable Bond Funds 2.450 0.16 1,583.053 4,894
All Money Market Funds 1.209 0.05 2,331.664 1,357
All Municipal Bond Funds -0.278 -0.09 326.843 1,377