U.S.-based taxable bond funds post 7th straight week of inflows -Lipper
(Adds comment by head of research services at Lipper, detail on flows) By Jennifer Ablan and Ashley Lau NEW YORK, Feb 19 (Reuters) - Investors in U.S.-based funds poured $5.9 billion into taxable bond funds in the week ended Feb. 18, marking their seventh straight week of inflows, data from Thomson Reuters' Lipper service showed on Thursday.
Riskier high-yield bond funds attracted $1.6 billion, their fourth straight week of inflows. Stock funds attracted $3.7 billion in inflows, with most of the new cash flowing into stock exchange-traded funds.
"Investors feel like they won't be shocked by the Federal Reserve, so they are searching for yield and feel comfortable doing it," said Tom Roseen, head of research services at Lipper. "If investors think there is a longer period of time that the Fed will raise interest rates, people will put money to work in fixed income and the riskier side of fixed income." Conversely, low-risk money market funds posted $14.1 billion of withdrawals, their sixth week of outflows out of seven.
"Money funds aren't doing anything for investors so that cash is being moved to yieldier sectors," Roseen said.
Federal Reserve policymakers expressed concern last month that raising interest rates too soon could pour cold water on the U.S. economic recovery, and fretted over the impact of dropping "patient" from the central bank's rate guidance.
The minutes from the Fed's Jan. 27-28 policy-setting meeting, released on Wednesday, showed officials grappling to square solid U.S. economic growth with the weakness in international markets as well as worrying about falling inflation expectations in the United States.
Stock funds attracted $3.7 billion in inflows, with most of the new cash flowing into stock ETFs, which are thought to reflect the behavior of the institutional investor. Stock mutual funds, however, which are commonly purchased by retail investors, posted $35 million in outflows.
Funds that specialize in safe-haven U.S. Treasuries posted $212 million in inflows for the week ended Wednesday, following $126 million in outflows.
Safer investment-grade corporate bond funds attracted cash of $2.98 billion, their seventh straight week of inflows, Lipper said.
European stock funds attracted $1.84 billion in new cash, their fourth straight week of inflows.
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 % Assets Assets ($Bil) Count ($Bil) All Equity Funds 3.702 0.07 5,226.442 11,450 Domestic Equities -0.091 -0.00 3,796.308 8,233 Non-Domestic Equities 3.793 0.27 1,430.135 3,217 All Taxable Bond 5.934 0.26 2,326.510 5,958 Funds All Money Market -14.149 -0.60 2,362.955 1,273 Funds All Municipal Bond 0.059 0.02 345.707 1,466 Funds (Editing by Matthew Lewis)
