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ETFs fuel best equity fund inflows in a year -Lipper
September 13, 2012 / 11:17 PM / 5 years ago

ETFs fuel best equity fund inflows in a year -Lipper

By Daniel Bases
    NEW YORK, Sept 13 (Reuters) - Professional investors plowed
cash into U.S. domiciled exchange-traded equity funds in the
week ended Sept. 12 while the retail investor further retreated
from stocks, data from Thomson Reuters' Lipper service showed on
    In the latest week, the overall tally that included both
mutual funds and exchange traded funds showed a net inflow of
$10.7 billion for equities, the best week of buying in a year.
    However, exchange traded funds, which are generally believed
to represent the investment behavior of institutional investors,
took in a net $12 billion, their best week since September 2011.
    Excluding equity ETFs from the mix showed the retail
investor pulled back from stocks for a fifth week running, a
period in which the U.S. benchmark Standard & Poor's 500 stock
index rose 2.45 percent. In the latest reporting week the S&P
500 rose 2.36 percent while mutual funds, thought to
represent the retail investor, had $1.33 billion in net
    "The $1.3 billion out is still a relatively small amount to
leave considering the equity market size. At the margin people
are still skeptical about equities, perhaps. It could just be
drawing down of accounts," said Jeff Tjornehoj, head of Lipper
Americas Research.
    "You have older workers or retirees pulling money out to get
by and younger workers not adding back. Generally that
skepticism is probably accounting for the greatest difference in
activity," he said.
    Tjornehoj did point out that equity ETFs, while having "a
huge week and mutual funds having a dull one," there were some
pockets of activity that may point to a burgeoning interest in
equities by retail investors.
    Among the retail sector, mutual funds focused on the
international multicap sector were the top attraction for the
week, when excluding ETFs. They pulled in $220 million, followed
by $196 million from small-cap growth funds.
    "International multicap core funds are not a dividend play,
they represent a small step back toward an overall interest in
equities by retail mutual fund investors," said Tjornehoj.
    Retail mutual fund investors have withdrawn a net $32
billion year-to-date versus $93.75 billion in redemptions for
all of 2011.
    Comparatively, equity ETFs have pulled in a net $52.2
billion so far in 2012 versus $43.3 billion of inflows for all
of  last year.
    The retail sector of the market will almost certainly have
missed out on Thursday's stock rally sparked by the U.S. Federal
Reserve's decision to push an aggressive plan to try to
stimulate economic growth with monthly purchases of $40 billion
worth of mortgage-backed securities. 
    That news sent a surge of buy orders into the stock market,
lifting benchmark indexes to multi-year highs. 
    While the latest weekly Lipper data does not capture the
Fed's decision on Thursday to buy mortgage-backed bonds, it does
overlap with a similar decision exactly one week ago by the
European Central Bank to embark on a bond-buying program.
    Both central banks are hoping the actions will lower
interest rates and fuel more borrowing and investing by
businesses and individuals with the ultimate goal of spurring
job growth.
    Even though interest rates in the United States are near
zero and the ECB's main interest rate is at a record low 0.75
percent, investors have not lost their appetite for fixed income
investments, demonstrating an acute worry about long-term
capital preservation.
    Taxable bond funds pulled in $4.9 billion in the latest week
while money market funds garnered an additional $6.2 billion.
    Year-to-date, fixed income funds have taken in $220 billion
in net new money versus $178.2 billion in all of 2011.
    The weekly Lipper fund flow data is compiled from reports
issued by U.S.-domiciled mutual funds and exchange-traded funds.
    The following is a broad breakdown of the flows for the
week, including exchange-traded funds (in billions of dollars): 
 Sector                    Flow Chg  %       Assets      Count
                           ($ blns)  Assets  ($ blns)    
 All Equity Funds          10.734    0.39    2,873.583   10,048
 Domestic Equities         9.950     0.47    2,186.531   7,462
 Non-Domestic Equities     0.784     0.12    687.052     2,586
 All Taxable Bond Funds    4.907     0.34    1,451.657   4,640
 All Money Market Funds    6.207     0.27    2,299.119   1,415
 All Municipal Bond Funds  0.820     0.27    308.625     1,335

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