By Daniel Bases
NEW YORK, March 1 (Reuters) - U.S. fund investors turned positive on equities with domestic funds garnering most of the fresh cash, while municipal bond funds held onto positive territory although their inflows dwindled to a three-month low, data from Thomson Reuters' Lipper showed on Thursday.
In the week ended Feb. 29, U.S. equity funds pulled in a net $7.5 billion in new investment, with domestic equities providing $6.6 billion of the total.
The flow data, however, represents a mixed bag of sorts with two large exchange traded funds tracking the U.S. benchmark Standard & Poor's 500 stock index moving in opposite directions. ETFs anecdotally are thought to represent institutional investor behavior.
While not unprecedented, the large-cap State Street SPDR S&P 500 ETF pulled in a net $4.7 billion while the BlackRock iShares S&P 500 index fund had net outflows of $742 million.
"With this type of mixed bag we are seeing in the market people are going to interpret it in different ways. Either they see a risk play as intact or they take a cautious stance where the signals are pointing to trouble ahead," said Matthew Lemieux, research analyst at Lipper.
"This could be due to big institutional players, where one guy might say buy and another might say the 13,000 on the Dow (Jones industrial average) is a place to take money off the table. There is no clear direction for the market in terms of all asset classes," he said.
Tax-free U.S. municipal bond funds pulled in a net $357 million while taxable bond funds had a muted inflow of just over $3 billion, their weakest showing since the first week of the year.
Investors maintain a bias for income producing investments, extending themselves for yield and with it higher risk. In that vein, corporate high yield bond funds pulled in $565 million while investment grade bond funds had net inflows of $970 million.
Equity income funds scooped up $539 million in the latest week, extending their inflow streak from early May.
At the same time U.S. stocks, which represent higher risk assets, are at multi-year highs, the traditional safe haven of gold is seeing prices hold above $1,700 an ounce, even after taking a more than 5 percent tumble on Wednesday.
The selling ensued after U.S. Federal Reserve Chairman Ben Bernanke did not signal more monetary easing was imminent. Loose monetary policy has been a key support for gold's 9.8 percent rise so far this year. And while spot gold prices fell 4.60 percent in the course of the reporting week, the inflows into the world largest gold-backed ETF hit a 16-week high of $688 million.
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 Count
($Bil) Assets ($Bil) All Equity Funds 7.469 0.26 2,847.050 10,334 Domestic Equities 6.582 0.31 2,152.722 7,780 Non-Domestic Equities 0.887 0.13 694.328 2,554 All Taxable Bond Funds 3.010 0.22 1,375.041 4,501 All Money Market Funds -7.049 -0.30 2,369.743 1,460 All Municipal Bond Funds 0.357 0.12 288.063 1,400 (Reporting By Daniel Bases)