Stock funds worldwide
attract $11.4 billion over week: BofA
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[June 14, 2014]
By Sam Forgione
NEW YORK (Reuters) - Fund
investors worldwide poured $11.4 billion into stock
funds in the week ended June 11, marking the biggest
inflows into the funds since February after the European
Central Bank unveiled new stimulus measures, data from a
Bank of America Merrill Lynch Global Research report
showed on Friday.
The inflows came after the ECB cut interest rates to record lows
last Thursday, which lifted equities on both sides of the Atlantic
to record highs. Strong U.S. jobs data also boosted investors'
confidence in stocks, while bond funds attracted just $1.6 billion
"Investors who may have backed away a little from the market looked
to get back in," said Richard Sichel, who oversees $2 billion as
chief investment officer of Philadelphia Trust Co. The inflows into
stock funds in the latest week reversed the prior week's outflows of
Funds that specialize in European stocks attracted $2.6 billion,
marking their biggest inflows in 16 weeks, according to the report,
which also cited data from fund-tracker EPFR Global. U.S.-focused
stock funds raked in $5.1 billion after attracting just $1.2 billion
the prior week.
The benchmark S&P 500 stock index rose 0.83 percent over the
week-long period ending Wednesday.
Emerging market equity funds attracted $2.3 billion in new cash,
marking their biggest inflows in nine weeks. Japanese stock funds
posted $900 million in outflows, meanwhile, marking their biggest
outflows in 13 weeks.
"Investors are developing a new interest in emerging markets," said
Alan Gayle, director of asset allocation at RidgeWorth Investments
in Atlanta, Georgia. "The strength in the developed markets
obviously has a positive effect on the emerging market economies."
The latest strong U.S. data came when the Commerce Department's
non-farm payrolls report last week showed a solid pace of hiring in
May, returning employment to its pre-crisis level.
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The inflows into bond funds marked their weakest demand in three
months, according to the report.
St. Louis Federal Reserve Bank president James Bullard said Monday
that encouraging U.S. economic data could prompt him to move forward
his view on when rates should be raised. That renewed focus on the
risk of higher interest rates, or yields, which move in inverse
relationship to bond prices.
Floating-rate debt funds posted $1.3 billion in outflows, marking
their biggest withdrawals since August 2011. The funds, which are
protected from rising interest rates, posted outflows despite the
concerns of an earlier than expected Fed interest rate hike.
The preference for stocks over bonds showed in inflows of just $200
million into riskier high-yield bond funds, which marked their
lowest inflows in eight weeks. Some investors have noted excessive
prices on the bonds.
Precious metals funds posted $300 million in outflows, marking their
second straight week of outflows. On June 5, spot gold fell toward a
five-month low near $1,240 an ounce.
(Reporting by Sam Forgione; Editing by Chizu Nomiyama and W Simon)
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