U.S.-based stock funds attract $13.5 bln in latest week -ICI

Reuters

NEW YORK, Oct 30 (Reuters) - Investors in U.S.-based mutual

funds poured $13.5 billion into stock funds in the latest week

on expectations the Federal Reserve would keep its easy money

policies intact into 2014, data from the Investment Company

Institute showed on Wednesday.

The inflows into stock funds in the week ended Oct. 23

marked the biggest weekly inflow into the funds since the week

ended January 9, according to the data from ICI, a U.S. mutual

fund trade organization.

Funds that hold U.S. stocks attracted $9.2 billion of the

net inflows into stock funds, marking the biggest weekly inflow

into the funds since ICI began tracking weekly mutual fund flows

in January 2007.

Funds that hold non-U.S. stocks, meanwhile, attracted $4.36

billion in new cash, marking the biggest weekly inflows into the

funds since mid-February.

Global stock markets rallied over the reporting period and

benchmark 10-year Treasury yields fell after a U.S. budget deal

shifted investors' focus to the timing of the Fed's reduction in

its $85 billion in monthly bond-buying.

Weaker-than-expected U.S. jobs data bolstered expectations

that the Fed would maintain its stimulus into

2014.

The Standard & Poor's 500 stock index hit record

highs and rose 1.44 percent over the reporting week. MSCI's

world equity index rallied 1.8 percent over the

period.

Bond funds posted outflows of $2.3 billion over the weekly

period, marking the fourth straight week of net outflows from

the funds but down from outflows of $5.45 billion over the

previous week.

The latest outflows came even as the yield on the benchmark

10-year U.S. Treasury note fell about 19 basis points to 2.49

percent over the week on the expectations of continued Fed

stimulus. Bond yields move inversely to their prices.

Hybrid funds, which can invest in stocks and fixed income

securities, attracted $2.32 billion in new money, marking the

biggest inflows into the funds since mid-July.

In September, investors poured $45.6 billion into money

market funds, marking the biggest monthly inflows into the funds

since December 2012, data from ICI showed.

Money market funds attracted big inflows last month on

uncertainty surrounding the Fed's plans for reducing its

stimulus, along with concerns over looming U.S. debt talks,

according to Tom Roseen, head of research services at Lipper.

Investors also committed $2.76 billion to stock funds in

September, marking the weakest monthly turnout for the funds

since they had outflows in Dec. 2012, according to ICI data.

The modest inflows came even as the S&P 500 hit record

highs in the wake of the Fed's decision on Sept. 18 to maintain

the pace of its bond-buying program.

Investors also pulled $11.33 billion from bond funds in

September, marking the fourth straight month of outflows but

less than outflows of $29.14 billion in August.

The outflows from bond funds in September continued despite

reduced selling pressure on bonds. The yield on the 10-year U.S.

Treasury note plunged 17 basis points following the Fed

decision. As yields fall, bond prices rise.

The following data shows estimated ICI flows for the past

five weeks (all figures in millions of dollars):

9/25/13 10/2/13 10/9/13 10/16/1 10/23/13

3

Total Equity -3,670 -3,356 -3,113 2,933 13,543

Domestic -3,855 -4,096 -5,184 832 9,185

World 186 740 2,071 2,101 4,358

Hybrid* 1,318 -52 191 619 2,315

Total Bond 1,766 -396 -2,550 -5,446 -2,322

Taxable 2,054 473 -1,521 -3,597 -1,300

Municipal -289 -869 -1,029 -1,849 -1,023

Total -586 -3,803 -5,472 -1,893 13,535

*Hybrid funds can invest in stocks and/or fixed income

securities.

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