Equity fund outflows dominated by one ETF -Lipper

Fri Sep 7, 2012 3:56am IST

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By Daniel Bases
    NEW YORK, Sept 6 (Reuters) - Equity fund investors were net
sellers in the holiday-shortened week ended Sept. 5, pulling a
net $6.8 billion out of that market, primarily from one
exchange-traded fund, data from   Thomson Reuters' Lipper
service showed on Thursday.
    State Street's SPDR S&P 500 ETF fund was the culprit
behind the net selling, with redemptions totaling just over $6
billion. It represented the worst week for the ETF since
mid-December 2011.
    Even excluding ETFs, equity funds had net outflows of $901
million. ETFs are generally believed to represent the investment
behavior of institutional investors, while mutual funds are
thought to represent the retail investor.
    "We had the shortened week for the (U.S.) Labor Day holiday
and very low volumes. People are coming back facing September,
which is historically one of the worst for returns," said Tom
Roseen, head of research services at Lipper.
    "It is almost entirely due to the SPY. I don't think it was
people applying the brake so much as simply taking their foot
off the gas pedal," he said.
    The outflows occurred during the historically slow end of
the northern hemisphere summer when traders and investors are
typically away for holidays. During the trading week, the U.S.
benchmark Standard & Poor's 500 stock index slipped 0.50
percent, though the index is around levels not seen since the
crescendo of the U.S. market crisis four years ago.
    Two-thirds of the way through the third quarter, however,
the S&P 500 index is up 5.12 percent, including Thursday's rally
on the back of the new European bond-buying program announced by
the European Central Bank aimed at stemming the region's debt
crisis.
    "The ECB's decision does make it a little bit better today,
but people are still holding their breath ahead of the
employment numbers tomorrow and the Fed next week," Roseen said.
The Federal Reserve's policy-setting committee meets next week.
    Investors are looking for confirmation of recent upbeat
employment data from both the private and public sectors.
 
    Washington releases the August employment report on Friday,
which economists think will show only modest hiring, with
nonfarm payrolls expected to rise 125,000. The unemployment rate
is seen holding at 8.3 percent.
    
    BOND FUNDS POSITIVE
    The trepidation over economic growth prospects and low
inflation remains the driving factors for fixed income fund
investors. While paltry, net buying of $374 million worth of 
taxable bond funds extended the inflow streak to nine weeks.
    Money market funds pulled in just over $700 million in fresh
capital while municipal bond funds had $260 million in net
inflows.
    But the freed-up money that left equities did not really go
into U.S. Treasuries. Funds that purchase U.S. Treasuries had
net outflows of just over $1 billion for the reporting week.
    Reaching for yield, investors maintained some modicum of
interest in corporate high-yield funds, putting $200 million to
work in that sector while investment grade corporate bond funds
pulled in a net $616 million.
    In recent weeks, the prospect of the Fed launching another
round of monetary stimulus has sparked more interest in gold.
    Funds focused on gold and natural resources pulled in a net
$518 million, while the State Street SPDR Gold Fund had
net inflows of $196 million, extending its streak of fresh
capital to five weeks.
    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          -6.803    -0.24   2,784.233   10,065
 Domestic Equities         -6.615    -0.31   2,123.130   7,478
 Non-Domestic Equities     -0.187    -0.03   661.103     2,587
 All Taxable Bond Funds    0.374     0.03    1,441.202   4,641
 All Money Market Funds    0.704     0.03    2,292.470   1,416
 All Municipal Bond Funds  0.260     0.08    309.274     1,335
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