(Adds additional flows, analyst comment) By Sam Forgione NEW YORK, July 31 (Reuters) - Investors in U.S.-based funds poured a net $7.6 billion into stock funds in the week ended July 30 on optimism that U.S. stocks could climb further, data from Thomson Reuters' Lipper service showed on Thursday.
The net inflows were the biggest in seven weeks and reversed the prior week's net outflows of $7.6 billion. All of the inflows went into exchange-traded funds, which attracted $7.9 billion, while mutual funds posted $303 million in outflows.
ETFs are thought to represent the behavior of the institutional investor, while mutual funds are commonly purchased by retail investors.
"Expectations are that earnings are going to improve in coming quarters," said Barry Fennell, senior research analyst at Lipper.
He said investors likely sought exposure to U.S. stocks on optimism that they could rise after a dip in the latest week, which partly occurred on weak second-quarter earnings from companies such as Amazon.com and UPS.
The benchmark S&P 500 index, which has risen roughly 6.6 percent this year through Wednesday, fell 0.9 percent for the period, while MSCI's all-country world index fell 0.7 percent over the week.
Emerging market stock funds attracted $1.2 billion, marking their biggest inflow in seven weeks. Fennell said some expectations for a continued dovish stance from the Federal Reserve in its policy statement on Wednesday boosted sentiment toward emerging market stocks.
Taxable bond funds attracted $1.2 billion, marking their sixth straight week of inflows. Funds that hold riskier high-yield junk bonds posted $1.5 billion in outflows, however, marking their third straight week of outflows.
Funds that hold floating-rate bank loans, which are protected from rising interest rates, posted $406 million in outflows, marking their third straight week of withdrawals.
Junk bonds are "definitely over-valued" while investors are also wary of valuations on floating-rate loans, said Lipper's Fennell.
Emerging market bond funds, like their stock counterparts, also attracted new cash. They attracted inflows of $514 million, their biggest since early June.
The weekly Lipper fund flow data is compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds.
The following is a broad breakdown of the flows for the week, including exchange-traded funds (in $ billions): Sector Flow Chg Pct Assets Count ($ bln) Assets ($ bln) All Equity Funds 7.592 0.18 4,233.513 10,900 Domestic Equities 5.432 0.17 3,124.664 7,938 Non-Domestic Equities 2.160 0.19 1,108.849 2,962 All Taxable Bond 1.198 0.07 1,817.797 5,536 Funds All Money Market -3.601 -0.16 2,269.197 1,307 Funds All Municipal Bond 0.419 0.14 294.240 1,430 Funds (Reporting by Sam Forgione; Editing by Diane Craft and Dan Grebler)
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