By Sam Forgione
NEW YORK, Sept 19 Investors in funds based in
the United States poured $18.1 billion into stock funds in the
latest week as global markets rallied on expectations the
Federal Reserve would maintain its easy-money policies, data
from Thomson Reuters' Lipper service showed on Thursday.
The inflows into stock funds over the week ended Sept. 18
were the biggest since early January. Investors have committed
nearly $31 billion to stock funds in the latest two weeks,
marking the strongest two-week run for the funds since Lipper
began tracking them in 1992.
"The activity this week all reflected more of a risk-on
attitude," said Jeff Tjornehoj, head of Americas research at
Lipper. "We had a pretty good tone in equity markets."
U.S. shares surged to record highs on Wednesday, the last
day of Lipper's reporting period, after the Fed said it would
maintain the pace of its $85 billion in monthly bond purchases
and await more evidence of solid economic growth.
The Standard & Poor's 500 stock index and the Dow
Jones industrial average hit record highs on Sept. 18.
Global equity markets also gained after former U.S. Treasury
Secretary Lawrence Summers on Sunday withdrew from consideration
to be the next Fed chairman.
The MSCI world equity index rose 1.6 percent
over the reporting period, while the S&P 500 index rose 2.2
percent for the week.
Summers, a former top aide to President Barack Obama, was
considered to be the front-runner to replace current Fed
Chairman Ben Bernanke, whose second term expires in January. A
potential Summers nomination was viewed as less favorable for
the continuation of stimulus measures, which have helped boost
the S&P 500 more than 20 percent this year.
Stock exchange-traded funds attracted $15.5 billion of the
total inflows into stock funds in the latest week, marking the
biggest inflows into the funds since December 2008. The SPDR S&P
500 ETF Trust, which tracks the S&P 500 index, attracted
$6 billion of the inflows.
ETFs are generally believed to represent the investment
behavior of institutional investors, while mutual funds are
thought to represent the retail investor.
Funds that hold emerging market stocks pulled in $2.14
billion in new cash over the week, down modestly from the prior
week's inflows but still showing strong demand.
Tjornehoj said investors sought emerging market stock funds,
which benefit from the Fed's stimulus, on sentiment during the
week that the Fed would maintain its easy-money policies.
Japanese stock funds also attracted small inflows of $215
million, marking their second straight week of demand from
investors. Japan's Nikkei average rose a modest 0.6 percent over
the weekly period.
The huge inflows into stock funds did not hinder demand for
taxable bond funds, which attracted $1.4 billion over the weekly
period, up slightly from the previous week's inflows and marking
the biggest inflows into the funds in eight weeks.
Selling pressure on bonds tempered over the week on
expectations that the Fed would largely keep its bond-buying
program in place. Yields on benchmark 10-year U.S. Treasury
notes fell over the weekly period ahead of the Fed meeting, and
plunged 17 basis points to 2.69 percent following the decision.
As yields fall, prices rise.
Riskier high-yield junk bond funds took in $1.4 billion in
new cash, marking the biggest inflows into the funds in eight
weeks. Junk bond funds are viewed by many investors as a
comparable investment to stocks, and tend to attract new demand
alongside stock funds.
Funds that hold floating-rate bank loans, which are
protected from rising interest rates by being pegged to
floating-rate benchmarks, had another strong week with inflows
of $1.3 billion.
Investors have poured $50.7 billion into the funds this year
on worries that a potential pullback in the Fed's bond-buying
will cause interest rates to spike higher, which would hurt bond
The huge inflows into stock funds and modest inflows into
bond funds weighed on demand for low-risk money market funds,
which invest in short-term securities. The funds had small
outflows of about $229 million over the period after attracting
$13.2 billion in new cash the prior week.
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 18.075 0.51 3,642.363 10,318
Domestic Equities 12.764 0.48 2,718.678 7,608
Non-Domestic 5.311 0.59 923.685 2,710
All Taxable Bond 1.378 0.09 1,599.339 5,117
All Money Market -0.229 -0.01 2,357.392 1,326
All Municipal Bond -1.102 -0.39 281.883 1,392