December 27, 2014 / 12:15 AM / 5 years ago

UPDATE 2-U.S.-based stock funds attract record $36.5 bln inflows in week -Lipper

(Adds additional market performance, flow data, investor
comments)
    By Sam Forgione
    NEW YORK, Dec 26 (Reuters) - Investors in U.S.-based funds
poured $36.5 billion into stock funds in the latest weekly
period, marking the biggest inflows on record as U.S. stocks
surged to record highs, data from Thomson Reuters Lipper service
showed on Friday. 
    The massive cash commitments for the week ended Dec. 24 were
the biggest since Lipper's records began in 1992. Investors
pledged entirely to funds that specialize in U.S. stocks, which
attracted $39 billion, while funds that invest in non-U.S.
shares posted $2.5 billion in outflows. 
    The demand came from both retail and institutional
investors, with stock mutual funds attracting $12.8 billion and
stock exchange-traded funds attracting $23.7 billion. Mutual
funds are commonly purchased by retail investors, while ETFs are
thought to represent the behavior of institutional investors. 
    The inflows into stock mutual funds were the biggest since
March 2000, while the inflows into stock ETFs were the biggest
since March 2008. The overall inflows into stock funds follows
$17.9 billion in withdrawals the prior week, which were the
biggest since February. 
    Funds that specialize in energy stocks attracted $1.5
billion, their biggest inflows since September 2008, while funds
that specialize in Japanese stocks posted $1.5 billion in
outflows, their biggest on record. 
    Taxable bond funds attracted $6.1 billion, their biggest
inflows in seven weeks but just a fraction of the inflows into
riskier stock funds. Funds that hold investment-grade corporate
bonds attracted $2.6 billion after posting $80 million in
outflows the prior week, which marked their first outflows since
June.  
    Funds that specialize in emerging market shares posted $990
million in outflows, their biggest withdrawals in 10 weeks.
Low-risk money market funds, meanwhile, attracted $17 billion,
their biggest inflows in three weeks.
    The inflows into stock funds came as the benchmark S&P 500
 stock index rallied 3.4 percent and hit record closing
highs on an unexpectedly strong report on U.S. economic growth
and on the back of reassuring comments by the Federal Reserve on
monetary policy. Year-end buying also boosted U.S. shares. 
    The Dow hit record closing highs and ended above
18,000 for the first time over the period. 
    The Commerce Department's 5 percent final estimate of U.S.
third-quarter economic growth, released Dec. 23, indicated the
quickest pace in over a decade.
    "That took a lot of people by surprise, and translating that
through the markets, it ought to make you a lot more positive on
the equity side," said Jack Rivkin, chief investment officer at
Altegris in La Jolla, California.
    He also said investors have favored stocks heading into the
year-end, given the recent upward momentum in U.S. shares.
    "You want that portfolio at the end of the year to look like
you knew what you were doing for the whole quarter, and that's
pushing more money into stocks." The S&P 500, which has risen
about 13 percent this year, has risen about 6 percent in the
fourth quarter.
    The inflows into energy stock funds came as brent oil prices
rebounded 5 percent on Dec. 19 in a recovery from near a
5-1/2-year low as investors squared books ahead of the end of
the year, following a six-month slide. 
    The record outflows from Japanese stock funds, meanwhile,
came despite Japan's recommitment to its massive economic
stimulus campaign pushed Asian stocks to their best day in 15
months.
    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 ($Bil)  Count
                     ($Bil)                              
 All Equity Funds    36.485     0.74      5,108.977      11,289
 Domestic            39.001     1.09      3,733.235      8,135
   Equities                                              
 Non-Domestic        -2.516     -0.19     1,375.742      3,154
   Equities                                              
 All Taxable Bond    6.085      0.27      2,248.046      5,871
   Funds                                                 
 All Money Market    16.997     0.71      2,402.032      1,276
   Funds                                                 
 All Municipal       0.659      0.19      337.938        1,469
   Bond Funds                                            
 
 (Reporting by Sam Forgione; Editing by James Dalgleish, Leslie
Adler and Ken Wills)
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