Record outflow from money market funds in week-EPFR

By Daniel Bases

NEW YORK, May 2 (Reuters) - Investors pulled a record $32.4 billion in cash out of money market mutual funds in the week ended April 30, according to data from fund tracker EPFR Global; however where it went is still a big question.

Markets have benefited in the last week or so from rising hope among investors that the worst of the credit crisis may have passed, fueling some optimism for riskier asset classes.

In the latest week, the data showed large redemptions from Western Europe, U.S. and sector funds, while equity funds tailored toward higher risk areas gained ground.

"Overall I think the data is mixed but there is a bias toward a more bullish outlook given the inflows that occurred went into the fund groups geared to riskier assets such as emerging market equities, technology and high-yield debt funds," said Cameron Brandt, global markets analyst at Boston-based EPFR Global.

"(Money markets funds) had not really been deployed as of Wednesday evening," he said.

Dedicated long-only emerging market equity funds took in $2.9 billion in fresh cash last week. However, for the week, the Morgan Stanley Capital International emerging market stock index was nearly unchanged, down just 0.57 points.

The other big equity-fund sector winner was Asia ex-Japan, which took in $1.4 billion in fresh cash. Latin American and EMEA (Europe, Middle East, and Africa) funds had net inflows.

But that is where the good news stopped.