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 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.
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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)
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