Investors in U.S.-based funds poured $4.3 billion into stock funds in the week ended July 16, encouraged by strong corporate earnings and big potential merger deals in the United States, data from Thomson Reuters' Lipper service showed on Thursday.
The net inflows were the biggest in four weeks.
Stock exchange-traded funds accounted for all the inflows, at $4.4 billion, while stock mutual funds posted outflows of $70.5 million. ETFs are thought to represent the behavior of institutional investors, while mutual funds are typically purchased by retail investors.
The SPDR S&P 500 ETF Trust attracted most of the new cash with inflows of $4.1 billion. The ETF mimics the benchmark S&P 500 stock index, which rose a modest 0.4 percent over the weekly period.
Japanese stock funds posted $411 million in outflows, marking their first outflows in four weeks.
"Corporate earnings from some of the major banks boosted confidence in equities," said Patrick Keon, research analyst at Lipper, referring to second-quarter profits from JPMorgan Chase and Goldman Sachs, both of which beat analysts' expectations.
Keon said an environment of deal-making also helped drive inflows into stock funds. Time Warner Inc shares jumped Wednesday after Twenty-First Century Fox confirmed it made an $80 billion takeover offer for the company that was turned down.
Taxable bond funds attracted $2 billion in inflows, marking their biggest inflows in three weeks. Solid performance has driven inflows into the funds this year. The benchmark Barclays U.S. Aggregate Bond Index is up 3.7 percent this year.
Municipal bond funds attracted $158 million after $790 million in outflows the prior week.
Riskier high-yield bond funds posted $1.7 billion in outflows, marking their biggest outflows since August 2013, while floating-rate loan funds posted $440 million in outflows after attracting inflows the prior week.
Outflows of $9 billion from low-risk money market funds, the first withdrawals in four weeks, showed investors removing cash from the safe funds and putting it to work in stock funds.
The weekly Lipper fund flow data is compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds.
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