Investors pile into European, U.S. equities in latest week -Lipper
(Adds sixth straight week of inflows into Japanese stock funds, table) By Sam Forgione NEW YORK, March 19 (Reuters) - Investors in U.S.-based European stock funds poured in $1.2 billion for the week ended Thursday, marking their eighth week of net inflows, data from Thomson Reuters' Lipper service showed on Thursday.
The European Central Bank's 1 trillion-euro government bond-buying program, which began last week, is spurring already surging demand for European equities as the euro weakens and European bond yields fall to record lows.
"Another big week for opportunistic investors via European Region ETFs, especially the ones with built-in hedging," said Jeff Tjornehoj, head of Lipper Americas Research. "Not buying them is like choosing a car that doesn't come with airbags." The appetite for equities extended into U.S.-based stock exchange-traded funds, which attracted a whopping $8.5 billion of net inflows, and U.S. equity mutual funds, albeit at $56 million of net inflows.
The Federal Reserve on Wednesday moved a step closer to hiking rates for the first time since 2006, but downgraded its economic growth and inflation projections, signaling it is in no rush to push borrowing costs to more normal levels.
"I would believe that ETF investors - the institutions including hedge funds - are following Fed activity," Tjornehoj said. In a report Thursday, Lipper said ETF investors were buying SPDR S&P 500 ETF Trust with inflows of $5.5 billion and iShares Russell 2000 ETF at $1 billion-plus.
On the mutual fund side, the $1.29 billion of net inflows for non-domestic equity funds was almost completely negated by the $1.23 billion of net outflows for domestic equity funds, Tjornehoj. He added that mutual funds with just $56 million of inflows "suggest 'mom and pop' are losing faith in a rally - too much volatility lately?" Taxable bond funds attracted $2.3 billion in new cash, reversing outflows of $1.8 billion the prior week. Moreover, U.S.-based Treasury funds saw their first inflows since mid-February, posting $75 million of new cash.
Far out on the credit quality curve, U.S.-based funds high-yield "junk" bond funds posted $1 billion in outflows, their second straight week of outflows, according to Lipper data.
For their part, U.S.-based Japanese stock funds saw another solid week with $761 million of inflows, their sixth straight week of inflows.
All told, money market funds posted $21 billion in outflows to mark their biggest weekly retreat since June of last year.
The following is a broad breakdown of the flows for the week, including exchange-traded funds (in $ billions): Sector Flow Chg % Assets Assets Count ($Bil) ($Bil) All Equity Funds 8.560 0.17 5,268.432 11,469 Domestic Equities 5.238 0.14 3,814.892 8,248 Non-Domestic 3.322 0.24 1,453.540 3,221 Equities All Taxable Bond 2.343 0.10 2,344.426 5,989 Funds All Money Market -21.095 -0.89 2,346.658 1,275 Funds All Municipal Bond 0.134 0.04 347.358 1,462 Funds (Reporting by Sam Forgione; Editing by Jennifer Ablan, Alan Crosby and Cynthia Osterman)
