Tags: Lipper | US | Stock | Funds

Investors Pour $11.8 Billion into US Stock Funds

Thursday, 31 Oct 2013 08:12 PM

Investors in funds based in the United States poured $11.8 billion into stock funds in the latest week on expectations the Federal Reserve would stick with its current bond-buying program, data from Thomson Reuters' Lipper service showed on Thursday.

"There is a lot of uncertainty gone," said Jeff Tjornehoj, head of Americas research at Lipper. "People feel confident that bond-buying will keep asset prices elevated."

The new demand in the week ended Oct. 30 marked the third straight week of big inflows into stock funds.

Editor’s Note: New Video: Obama Plans to Redistribute Seniors’ Wealth

U.S. stocks have surged to record highs within the past two weeks on bets that the Fed would maintain its $85 billion in monthly bond-buying at its October meeting. In line with expectations, the central bank extended its bond-buying support on Wednesday, but issued a slightly less-dovish-than-expected statement, leading to a dip in global markets and Treasury bond prices.

The Fed dropped a reference to a "tightening of financial conditions observed in recent months" from its list of risks to the outlook and removed a mention of concern over higher mortgage rates, which have fallen since the last meeting.

Despite the stock market dip at the end of the week, funds that hold U.S. stocks attracted $8 billion as the Standard & Poor's 500 index rallied 1 percent over the weekly period.

Funds that hold international stocks, meanwhile, attracted about $3.5 billion, marking the eighth straight week of new cash into the funds. MSCI's world equity index rose 0.7 percent over the weekly period.

Funds that hold emerging-market stocks attracted $1.2 billion in new cash, marking their biggest inflows in five weeks. MSCI's emerging market equities index rose 0.9 percent over the period. Emerging-market assets have benefited from the Fed's easy money policies. Tjornehoj said the demand stemmed from the expectations of continued Fed stimulus.

Investors pulled about $60 million out of Japanese stock funds, however, reversing inflows of $373 million the previous week. Japan's Nikkei stock average suffered its biggest one-day loss in 2-1/2 months on Oct. 25, hit by the yen's strength against the dollar.

Money market funds attracted $7.7 billion in new cash, down from massive inflows of $43.8 billion in the previous week. Institutional investors poured $14.1 billion into the funds, while retail investors withdrew nearly $6.4 billion.

Tjornehoj said that institutional investors may have still parked cash in the funds on a looming suspicion that the U.S. stock market has hit a peak. The S&P 500 index has risen over 23 percent this year. Investors had poured cash into the funds, which hold low-risk assets such as short-dated government bonds, over the previous week after the threat of a U.S. debt default faded.

Taxable bond funds also reaped $1.3 billion in inflows, down from the previous week's inflows of $3.1 billion but still marking two consecutive weeks of demand following three prior weeks of outflows.

Investors gave $752.7 million to high-yield junk bond funds, marking the eighth straight week of demand for the funds. The funds tend to attract new cash alongside stock funds since they are viewed as riskier than other debt classes.

"There wasn't much to be excited about with the economy, and strangely enough that was good news for bonds," Tjornehoj said. Weak U.S. jobs data on Oct. 22 have fueled speculation that the Fed would keep its accommodative monetary policy in place. The yield on the benchmark 10-year U.S. Treasury rose just 4 basis points over the period and ended the week at 2.53 percent. That marked only a modest change from the prior week, when the yield fell to 2.47 percent, its lowest in three months. Bond yields move inversely to their prices.

Commodities and precious metals funds, which mainly invest in gold futures, had outflows of $296 million, marking the fifth straight week of withdrawals from the funds. The SPDR Gold Trust ETF had the biggest withdrawals of $274.6 million.

Editor’s Note: New Video: Obama Plans to Redistribute Seniors’ Wealth

The price of spot gold flattened late in the week. Gold was up less than 0.1 percent at $1,344.56 an ounce at the close of trading on Oct. 30.

The weekly Lipper fund flow data is compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds.

© 2017 Thomson/Reuters. All rights reserved.

 
1Like our page
2Share
Personal-Finance
Investors in funds based in the United States poured $11.8 billion into stock funds in the latest week on expectations the Federal Reserve would stick with its current bond-buying program, data from Thomson Reuters' Lipper service showed on Thursday.
Lipper,US,Stock,Funds
713
2013-12-31
Thursday, 31 Oct 2013 08:12 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved