February 13, 2014 / 11:46 PM / in 4 years

UPDATE 1-US-based stock mutual funds post $3.34 bln inflows - Lipper

By Sam Forgione
    Feb 13 (Reuters) - Investors in funds based in the United
States poured a net $3.34 billion into stock mutual funds in the
latest week on reassurance from Federal Reserve chair Janet
Yellen that the U.S. economy was on a better track. 
    The inflows into stock mutual funds in the week ended Feb.
12 marked the eighth consecutive week of inflows into the funds,
data from Thomson Reuters' Lipper service showed on Thursday.
Investors also committed $3.5 billion to equity ETFs following a
net $22.4 billion outflow from these instruments the previous
    Investors in exchange-traded funds are thought to represent
the institutional investor, including hedge funds. Mutual funds
are thought to represent retail investors.
    Overall, stock funds attracted $6.9 billion in new cash,
reversing the prior week's big outflows of $20.9 billion. 
    The inflows into stock funds came after Yellen, in her first
public comments as Fed chief, emphasized continuity in the U.S.
central bank's policy strategy of cutting asset purchases by $10
billion a month. 
    U.S. stocks rallied on Yellen's comments, with investors
interpreting the reduced need for the Fed's bond-buying as a
positive sign for the U.S. economy. 
    "Yellen's testimony lifted the spirits of investors," said
Jeff Tjornehoj, head of Americas research at Lipper. 
    The benchmark Standard & Poor's 500 stock index
rallied 3.9 percent over the reporting period. 
    Emerging market stock funds had outflows of $350 million,
however, marking the fifth straight week of withdrawals from the
    Investors are still avoiding the funds after concerns of a
capital flight out of emerging markets triggered volatility in
emerging market stocks in recent weeks, Tjornehoj said. 
    "The tolerance of emerging market assets is growing thin
because their performance has been rocky," he said.
    Taxable bond funds attracted $6.7 billion in new cash,
marking the sixth straight week of new money into the funds,
despite a slide in Treasuries prices. 
    The yield on the 10-year U.S. Treasury note rose 14 basis
points to 2.76 percent over the weekly period after Yellen's
comments, some positive U.S. jobless data, and a U.S. debt
ceiling deal limited demand for safe-haven bonds. Bond yields
move inversely to their prices. 
    Funds that mainly hold U.S. Treasuries attracted $703
million of the new cash into taxable bond funds, marking their
fourth straight week of inflows. 
    "The current environment is dispelling the notion of a rise
in interest rates," said Tjornehoj on the inflows into bond
    He said that, despite the rise in Treasuries yields over the
latest week, interest rates have not skyrocketed as some
investors anticipated. 
    Funds that hold riskier high-yield junk bonds attracted
about $1.5 billion in new cash, reversing the prior week's
mid-October. Since high-yield bonds and stocks are viewed as
risk assets, funds that hold the assets tend to attract inflows
    Commodities and precious metals funds, which mainly invest
in gold futures, attracted a slight $86 million in new cash,
marking their second straight week of inflows.
    From the beginning of the year through Wednesday, gold had
gained around 7.0 percent, propped up by concerns about emerging
markets and about economic growth in China.     
    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        6.855      0.19     3,852.766   10,634
 Domestic Equities       4.534      0.16     2,875.273   7,814
 Non-Domestic Equities   2.322      0.25     977.494     2,820
 All Taxable Bond Funds  6.658      0.40     1,692.833   5,350
 All Money Market Funds  5.489      0.23     2,415.538   1,326
 All Municipal Bond      0.082      0.03     277.830     1,415
0 : 0
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