(Adds hedge fund manager Dan Loeb's European position; investment-grade and junk bond flows) By Sam Forgione and Jennifer Ablan NEW YORK, April 27 (Reuters) - Investors ramped up their exposure to U.S.-based international-focused stock funds on relief that centrist Emmanuel Macron took the first round of voting in the French presidential election, reducing the prospect of an anti-establishment market shock.
International-focused stock funds attracted $1.8 billion in the week ended April 26, compared with inflows of $1.3 billion heading into the French election, according to data from Thomson Reuters' Lipper service on Thursday. It was the group's sixth straight week of inflows.
"While markets had deemed a Marine Le Pen-Emmanuel Macron run-off as the most likely outcome, there was an element of uncertainty," said Tom Roseen, head of research services at Thomson Reuters Lipper. "That uncertainty is gone and investors feel more comfortable increasing their exposure to international equities." For their part, U.S.-based European stock funds attracted $720 million over the weekly period, their biggest inflows in four weeks, Lipper data showed. U.S.-based European stock funds posted inflows of just $108 million before the French election, according to Lipper.
Roseen noted Germany's DAX was up a whopping 5.37 percent during the reporting period of April 19 and April 26 "which underscored the appetite for international and European funds. There were really strong rallies everywhere." Hedge fund manager Daniel Loeb told investors on Thursday that his $16 billion hedge fund Third Point saw more opportunities in Europe. Third Point took a position in Italian bank Unicredit Spa and a German utility, the firm said in its first quarter letter. During the first three months of the year, Third Point earned a 5.9 percent return.
Overall, investors in U.S.-based funds poured $7.2 billion into stock funds in the week ended Wednesday, marking the biggest inflows in seven weeks, although all of the cash went into exchange-traded funds over mutual funds. Stock ETFs attracted $12.7 billion inflows over the weekly period, while stock mutual funds posted outflows totaling $5.5 billion, Lipper data showed.
Taxable bond funds attracted $6.3 billion to mark their sixth straight week of inflows. U.S.-based corporate investment-grade bond funds attracted $4.7 billion of inflows over the weekly period, their biggest in five weeks, Lipper said.
At the lower end of the quality curve, U.S.-based high-yield junk bond funds posted inflows of $291 million over the weekly period, their first inflows in three weeks, Lipper said.
Roseen highlighted that the "risk-on trade" was underscored by Wall Street's fear index, the so-called VIX, dropped 23 percent during the reporting period.
The following is a broad breakdown of the flows for the week, including mutual funds and exchange-traded funds: Sector Flow Change Pct of Assets Count ($ blns) Assets ($ blns) All Equity 7.158 0.13 5,870.780 11,589 Funds Domestic 6.204 0.15 4,144.569 8,292 Equities Non-Domestic 0.954 0.06 1,726.212 3,297 Equities All Taxable 6.318 0.26 2,397.283 5,841 Bond Funds All Money 10.410 0.45 2,306.368 1,022 Market Funds All Municipal 0.145 0.04 375.804 1,392 Bond Funds (Reporting by Sam Forgione and Jennifer Ablan; editing by Bernard Orr and Grant McCool)