April 17, 2014 / 11:15 PM / in 4 years

UPDATE 1-U.S.-based stock funds post $3.6 bln outflows over week - Lipper

(Adds analyst comment, additional flows, table)
    By Sam Forgione
    NEW YORK, April 17 (Reuters) - Investors in U.S.-based funds
pulled $3.6 billion out of stock funds in the week ended April
16 on fears that a selloff in technology and biotech shares
could signal a steeper drop in U.S. stocks, data from Thomson
Reuters' Lipper service showed on Thursday.
    The outflows from stock funds marked the biggest since
February. Outflows of $3.8 billion from stock exchange-traded
funds accounted for the net outflows, while stock mutual funds
attracted $241 million in inflows. 
    Withdrawals from U.S.-focused stock funds accounted for the
net outflows from stock funds, while funds that specialize in
non-U.S. stocks attracted new demand. Emerging market stock
funds attracted inflows of $1.4 billion to notch their fourth
straight week of new demand.
    The SPDR S&P 500 ETF Trust, which tracks the
performance of the benchmark Standard & Poor's 500 stock
index, posted $5.2 billion in outflows while the index dropped
0.53 percent over the week. 
    ETFs are thought to represent the institutional investor,
while mutual funds are commonly purchased by retail investors. 
    "After a five-year bull market in stocks, investors are
getting ready for a pullback," said Tom Roseen, head of research
services at Lipper.
    Investors sold tech and biotech shares early in the week on
skepticism as to whether high-flying momentum stocks such as
TripAdvisor were overvalued. 
    The Nasdaq composite index, which is heavily
composed of technology company shares, fell 3.1 percent on April
10 in its largest daily percentage drop since November 9, 2011.
The index fell 2.3 percent over the week. 
    Taxable bond funds, meanwhile, attracted $1.8 billion in
inflows, marking their sixth straight week of new demand.
Flexible funds, which can invest in all asset classes but tend
to focus on bonds, attracted $1.2 billion in new cash.
    While the inflows extended the streak of new demand into
taxable bond funds, the latest marked the lowest inflows over
that six-week period. Investment-grade corporate bonds attracted
just $670.5 million, marking their weakest turnout since
mid-December 2013.
    Riskier high-yield bond funds posted $222.5 million in
outflows, marking their first withdrawals in three weeks on
investors' general risk aversion over the period. Floating-rate
loan funds posted $249 million in outflows, marking their first
outflows since June 2012.
    Funds that hold floating-rate loans, which are protected
from rising interest rates by being pegged to floating-rate
benchmarks, partly lost favor following Federal Reserve Chair
Janet Yellen's statement on Wednesday that the U.S. economy
would need help from the central bank for some time to come,
Roseen said.
    Yellen said that achieving the Fed's economic goals "will
likely require low real interest rates for some time," a policy
view she said was shared broadly across many advanced
    "People aren't as worried about rising interest rates,"
Roseen said.
    Low-risk money market funds posted $32.7 billion in
outflows, marking their biggest outflows since mid-February and
their seventh straight week of outflows. Roseen said investors
pulled cash out of the funds, which typically invest in safe
short-term securities, in order to pay federal and state income
taxes due April 15.
    Commodities and precious metals funds, which mainly invest
in gold futures, posted $328.3 million in outflows, marking
their third straight week of withdrawals. 
    Spot gold inched up 42 cents to $1,302.46 an ounce by
3 p.m. EDT (1900 GMT) on Wednesday, following Tuesday's 1.8
percent drop on heavy technical selling after prices fell below
the 200-day moving average.
    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
                       ($Bil)               ($Bil)     
 All Equity Funds      -3.570     -0.09     3,997.074  10,710
 Domestic Equities     -6.637     -0.22     2,959.833  7,815
 Non-Domestic          3.067      0.29      1,037.241  2,895
 All Taxable Bond      1.788      0.10      1,759.817  5,402
 All Money Market      -32.740    -1.42     2,275.817  1,318
 All Municipal Bond    0.074      0.03      284.692    1,441

 (Reporting by Sam Forgione; Editing by Mohammad Zargham and
Richard Chang)

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