NEW YORK (Reuters) - Total estimated inflows to long-term mutual funds and exchange-traded funds (ETFs) were $20.77 billion for the week ended Oct. 18, the biggest attraction of cash since mid-June, as investors put money to work at the start of the fourth quarter against the backdrop of rising global equity markets, the Investment Company Institute reported Wednesday.
Estimated mutual fund inflows were $3.91 billion while estimated net issuance for ETFs was $16.86 billion. Equity funds had estimated inflows of $12.61 billion for the week, compared to estimated inflows of $3.41 billion in the previous week.
Domestic equity funds had estimated inflows of $6.97 billion, and world equity funds had estimated inflows of $5.64 billion. Jim Paulsen, chief investment strategist at The Leuthold Group, said investors face a difficult asset allocation decision as 2017 comes to a close.
“Should you stay invested for further gains in the stock market yet this year, or should you begin to get more defensive considering economic surprise momentum is likely to fade early next year?” Paulsen asked. “Our best guess is the stock market will trend higher through year-end but may struggle during the first half of next year.”
So far this year, the Standard & Poor 500 Index has posted returns of over 14 percent while the Hang Seng Indexes Co has posted returns of 28.65 percent.
The ferocious appetite for income has also pushed investors into bond funds despite falling yield levels.
Bond funds had estimated inflows of $9.31 billion for the week, compared to estimated inflows of $9.14 billion during the previous week. Taxable bond funds saw estimated inflows of $8.38 billion, and municipal bond funds had estimated inflows of $931 million.
Commodity funds, which are ETFs that invest primarily in commodities, currencies, and futures, had estimated outflows of $428 million for the week, compared to estimated inflows of $265 million in the previous week.
Reporting By Jennifer Ablan; editing by Grant McCool