NEW YORK (Reuters) - U.S.-based stock funds posted $8.6 billion in net outflows during the week that ended Dec. 9, Lipper data showed on Thursday, marking the category’s worst outflows since October.
The outflows were led by $12.4 billion in cash that poured out of domestic-stock mutual funds. Mutual fund outflows were offset by inflows that moved into ETFs.
While the mutual funds’ outflows may suggest retail investors’ aversion to risk, Lipper analyst Jeff Tjornehoj said the often-large distributions paid out by funds at the end of year, which show up as cash withdrawals, contributed to the gloomy numbers.
Tjornehoj noted the example of the Columbia Acorn Fund, which he said paid a distribution representing 35 percent of its net assets. ETFs typically pay smaller distributions than mutual funds.
U.S. stock ETFs took in $3.2 billion in new money, led by $1 billion in cash added to financial and banking funds.
“Maybe investors are taking fire on banks again in anticipation of higher interest rates coming, potentially, next week, and that may be good for banks,” Tjornehoj said.
Banks could increase revenue if the U.S. Federal Reserve decides to raise the benchmark interest rates it controls at a meeting next week.
European stock funds attracted $871 million during their week, the second straight week of inflows, as quantitative easing by the European central banks is seen by some investors as boosting stock values.
Taxable bond mutual funds and exchange-traded funds posted $7.9 billion in outflows during the same period, Lipper said.
That included $3.5 billion in outflows from high-yield bond mutual funds and ETFs. Mutual funds were responsible for 81 percent of those outflows.
Emerging markets stock and bond funds extended - to six and seven weeks, respectively - their streak of outflows. Debt-laden emerging market countries are seen as vulnerable if borrowing in dollars becomes more expensive. Emerging-market stock funds posted $382 million in outflows, while the debt funds lost $258 million to investor withdrawals, Lipper said.
Meanwhile, bond funds that protect against rising inflation took in $166 million in new money during the week, Lipper said.
Energy-sector stock funds posted $199 million in outflows during the week, according to Lipper, as oil prices bottomed. Crude fell on Thursday to its lowest value in nearly seven years.
Relatively low-risk money-market funds attracted $13.5 billion over the same period, according to the fund research service.
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 -8.604 -0.16 5,133.115 11,937
Domestic -9.264 -0.25 3,623.955 8,534
Non-Domestic 0.661 0.04 1,509.159 3,403
All Taxable -7.918 -0.36 2,182.551 6,097
All Money 13.473 0.57 2,357.105 1,196
All Municipal 0.742 0.21 355.693 1,507
Reporting by Trevor Hunnicutt; Editing by Tom Brown