NEW YORK: US mutual fund investors added a net $2.54 billion to equity funds in the week ended Feb. 9, the majority of which went into domestic-focused funds, data from Thomson Reuters' Lipper service showed on Thursday.
The trend into developed market stocks continued as emerging market equity funds suffered a third week of net redemptions, albeit significantly less than last week's record outflow.
Municipal bond funds continue to suffer as net redemptions hit a thirteenth consecutive week. The latest tally of outflows hit $1.2 billion versus $1.1 billion in the prior period. Net outflows from muni bond funds since mid-November now stands at $21.67 billion.
Investors did put fresh money to work in taxable bond funds, recording inflows of $3.73 billion. However there was money put back onto the sidelines with a net inflow of $8.66 billion into money market mutual funds.
Exchange traded equity funds had net outflows of $2.07 billion. The SPDR S&P 500 ETF had net redemptions totaling $3.23 billion, the biggest outflow among ETFs this past week.
"That outflow from SPDR S&P 500 ETF has to be institutional money. It doesn't mean they are negative on the market, just that they likely parked some cash there at the beginning of the year until they make up their minds on where to put it to work," said Tom Roseen, senior analyst at Lipper.
"More proof of investors taking an active role in the equity market is the fact that conventional funds took in cash ($4.6 billion) for a 17th week out of the last 18 whereas ETF equity funds had net redemptions of $2.1 billion," Roseen said.
That was a third consecutive week of outflows from equity ETFs.
Emerging market equity funds including ETFs had net outflows of $705 million versus the record $4.1 billion in net redemptions the prior week. However, excluding ETFs from the mix, actively managed emerging market stock funds took in a net $171 million.
"Investors were using ETFs to get into emerging markets but they are certainly exiting now. However it isn't all negative as the actively managed open-end emerging market funds took in fresh capital," said Roseen.
Egypt remains firmly at the top of the news agenda and has been viewed as one reason for the selling of emerging market equity funds since late January.
One of the more liquid of the funds focused on Egypt, The Van Eck Market Vectors Egypt equity ETF, had minute outflows of just $6,000 in the latest week. Assets in the fund actually increased as investors bid up the price of the ETFs shares while political events unfolded.
The fund doubled in size the week prior as investors flooded it with a net inflow of $12.8 million. The fund as of Feb. 9 has $24.9 million in assets.
Late on Thursday Egyptian President Hosni Mubarak provoked outrage on Egypt's streets when he said he would hand over powers to his deputy but refused to step down after more than two weeks of protests demanding that he quit.
In the fixed income space, mortgage-backed securities had outflows once again. The combined government Treasury and mortgage fund group had net outflows of $494 million versus $77 million the week prior.
The more narrowly defined government mortgage funds that purchase debt from government-sponsored entities like Fannie Mae and Freddie Mac had net outflows of $167 million, up from the prior week's net outflow of $151 million.
This sector has had outflows in 17 of the last 18 weeks.
US Treasury focused funds had outflows of $276 million, the first net redemptions in eight weeks.
Bank loan funds extended their inflow streak to 31 weeks, taking in a net $1.05 million. Investors have turned to this sector of the market in search of higher yields versus what they can earn on safer US Treasuries. Since early July net inflows total $12.9 billion.
The weekly Lipper fund flow data is compiled from reports issued by US-domiciled mutual funds and exchange-traded funds. The weekly data goes back to 1992.
Below is a broad breakdown of the flows for the week, including exchange-traded funds:?
Sector Flow Pct Total Share
Change Change Assets Class
(in $ billions) In Assets Count
==============================================================
All Equity Funds 2.548 0.09 2,707.804 9,681
-Domestic Equities 2.044 0.10 2,012.350 7,377
-Non-Domestic Equities 0.504 0.07 695.454 2,304
All Taxable Bond Funds 3.732 0.30 1,232.158 3,899
All Money Market Funds 8.659 0.34 2,526.622 1,550
All Municipal Bond Funds -1.163 -0.38 305.389 1,528
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