Investors poured $9.4 billion into US-based stock exchange-traded funds (ETFs) in the week ended Wednesday, the group's eighth consecutive week of inflows, against a backdrop of record closing highs on major markets, Lipper data showed on Friday. Retail investors, however, yanked money out of US-based stock mutual funds, pulling $3.5 billion during the same period, continuing a heavy streak of outflows that has persisted in all but two weekly periods in 2017, Lipper data showed.
ETFs are generally believed to represent the investment behaviour of institutional investors including hedge funds, while mutual funds are thought to represent the mom-and-pop retail investor. "Increasingly advisors and retail investors are choosing lower-cost ETFs over active equity mutual funds in an effort to put more money to work, because ETFs have performed better and as regulations for advisors have favoured index-based strategies," said Todd Rosenbluth, director of ETF and Mutual Fund Research at CFRA.
Risk-taking was also on display in parts of the US corporate credit markets. US-based investment-grade corporate bond funds attracted $2.6 billion of inflows in the latest week, their 10th consecutive week of inflows, Lipper said. At the lower end of the credit-quality spectrum, junk bonds were avoided again by investors. US-based high-yield bond funds posted $209 million of outflows in the week ended Wednesday.
US-based international equities attracted $2 billion in the latest week, the sector's 14th consecutive week of inflows, Lipper added. For their part, emerging-market debt funds posted inflows of $322 million and emerging-market equities posted outflows of $68 million, according to Lipper data. US-based domestic equities funds saw $3.88 billion of inflows in the latest week ended Wednesday, following $2.35 billion of outflows the previous week. US-based non-domestic equities funds posted inflows of $2 billion in the latest week, their 10th straight week of inflows, according to Lipper data.
Investors hedged their equity exposure by stashing some money away in cash and cash-equivalent accounts. US-based money market funds attracted $14.4 billion of inflows in the latest week, their third straight week of inflows, Lipper said.