(Reuters) - Investors in U.S.-based funds pulled $3.6 billion out of stock funds in the week ended April 16 on fears that a selloff in technology and biotech shares could signal a steeper drop in U.S. stocks, data from Thomson Reuters' Lipper service showed on Thursday.
The outflows from stock funds marked the biggest since February. Outflows of $3.8 billion from stock exchange-traded funds accounted for the net outflows, while stock mutual funds attracted $241 million in inflows.
Withdrawals from U.S.-focused stock funds accounted for the net outflows from stock funds, while funds that specialize in non-U.S. stocks attracted new demand.
Emerging market stock funds attracted inflows of $1.4 billion to notch their fourth straight week of new demand.
The SPDR S&P 500 ETF Trust, which tracks the performance of the benchmark Standard & Poor's 500 stock index, posted $5.2 billion in outflows while the index dropped 0.53 percent over the week. ETFs are thought to represent the institutional investor, while mutual funds are commonly purchased by retail investors.
"After a five-year bull market in stocks, investors are getting ready for a pullback," said Tom Roseen, head of research services at Lipper. Investors sold tech and biotech shares early in the week on skepticism as to whether high-flying momentum stocks such as TripAdvisor were overvalued.
The Nasdaq composite index, which is heavily composed of technology company shares, fell 3.1 percent on April 10 in its largest daily percentage drop since November 9, 2011. The index fell 2.3 percent over the week.
Taxable bond funds, meanwhile, attracted $1.8 billion in inflows, marking their sixth straight week of new demand. Flexible funds, which can invest in all asset classes but tend to focus on bonds, attracted $1.2 billion in new cash.
While the inflows extended the streak of new demand into taxable bond funds, the latest marked the lowest inflows over that six-week period.
Investment-grade corporate bonds attracted just $670.5 million, marking their weakest turnout since mid-December 2013. Riskier high-yield bond funds posted $222.5 million in outflows, marking their first withdrawals in three weeks on investors' general risk aversion over the period.
Floating-rate loan funds posted $249 million in outflows, marking their first outflows since June 2012.
Funds that hold floating-rate loans, which are protected from rising interest rates by being pegged to floating-rate benchmarks, partly lost favor following Federal Reserve Chair Janet Yellen's statement on Wednesday that the U.S. economy would need help from the central bank for some time to come, Roseen said.
Yellen said that achieving the Fed's economic goals "will likely require low real interest rates for some time," a policy view she said was shared broadly across many advanced economies.
"People aren't as worried about rising interest rates," Roseen said. Low-risk money market funds posted $32.7 billion in outflows, marking their biggest outflows since mid-February and their seventh straight week of outflows.
Roseen said investors pulled cash out of the funds, which typically invest in safe short-term securities, in order to pay federal and state income taxes due April 15.
Commodities and precious metals funds, which mainly invest in gold futures, posted $328.3 million in outflows, marking their third straight week of withdrawals.
Spot gold inched up 42 cents to $1,302.46 an ounce by 3 p.m. EDT (1900 GMT) on Wednesday, following Tuesday's 1.8 percent drop on heavy technical selling after prices fell below the 200-day moving average.
The weekly Lipper fund flow data is compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds.
reuters.com
The outflows from stock funds marked the biggest since February. Outflows of $3.8 billion from stock exchange-traded funds accounted for the net outflows, while stock mutual funds attracted $241 million in inflows.
Withdrawals from U.S.-focused stock funds accounted for the net outflows from stock funds, while funds that specialize in non-U.S. stocks attracted new demand.
Emerging market stock funds attracted inflows of $1.4 billion to notch their fourth straight week of new demand.
The SPDR S&P 500 ETF Trust, which tracks the performance of the benchmark Standard & Poor's 500 stock index, posted $5.2 billion in outflows while the index dropped 0.53 percent over the week. ETFs are thought to represent the institutional investor, while mutual funds are commonly purchased by retail investors.
"After a five-year bull market in stocks, investors are getting ready for a pullback," said Tom Roseen, head of research services at Lipper. Investors sold tech and biotech shares early in the week on skepticism as to whether high-flying momentum stocks such as TripAdvisor were overvalued.
The Nasdaq composite index, which is heavily composed of technology company shares, fell 3.1 percent on April 10 in its largest daily percentage drop since November 9, 2011. The index fell 2.3 percent over the week.
Taxable bond funds, meanwhile, attracted $1.8 billion in inflows, marking their sixth straight week of new demand. Flexible funds, which can invest in all asset classes but tend to focus on bonds, attracted $1.2 billion in new cash.
While the inflows extended the streak of new demand into taxable bond funds, the latest marked the lowest inflows over that six-week period.
Investment-grade corporate bonds attracted just $670.5 million, marking their weakest turnout since mid-December 2013. Riskier high-yield bond funds posted $222.5 million in outflows, marking their first withdrawals in three weeks on investors' general risk aversion over the period.
Floating-rate loan funds posted $249 million in outflows, marking their first outflows since June 2012.
Funds that hold floating-rate loans, which are protected from rising interest rates by being pegged to floating-rate benchmarks, partly lost favor following Federal Reserve Chair Janet Yellen's statement on Wednesday that the U.S. economy would need help from the central bank for some time to come, Roseen said.
Yellen said that achieving the Fed's economic goals "will likely require low real interest rates for some time," a policy view she said was shared broadly across many advanced economies.
"People aren't as worried about rising interest rates," Roseen said. Low-risk money market funds posted $32.7 billion in outflows, marking their biggest outflows since mid-February and their seventh straight week of outflows.
Roseen said investors pulled cash out of the funds, which typically invest in safe short-term securities, in order to pay federal and state income taxes due April 15.
Commodities and precious metals funds, which mainly invest in gold futures, posted $328.3 million in outflows, marking their third straight week of withdrawals.
Spot gold inched up 42 cents to $1,302.46 an ounce by 3 p.m. EDT (1900 GMT) on Wednesday, following Tuesday's 1.8 percent drop on heavy technical selling after prices fell below the 200-day moving average.
The weekly Lipper fund flow data is compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds.
reuters.com
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