U.S.-based stock funds reap $4.2 billion on Yellen remarks: Lipper
Traders work on the floor of the New York Stock Exchange (Brendan McDermid Reuters, / November 12, 2013)
NEW YORK (Reuters) - Investors in U.S.-based funds poured $4.2 billion into stock funds in the latest week on signals from Federal Reserve Vice Chair Janet Yellen that the central bank would keep its bond-buying in place for some time, data from Thomson Reuters' Lipper service showed on Thursday.
The inflows in the week ended November 20 showed increased appetite for risk from the previous week, when investors committed $1.7 billion to stock funds.
"All the pronouncements from the Fed the market was expecting, it got," said Jeff Tjornehoj, head of Americas research at Lipper.
Yellen, who is President Barack Obama's nominee to succeed Ben Bernanke as chairman of the Fed, defended the U.S. central bank's bold steps to spur economic growth on November 14 and called efforts to boost hiring "imperative" during a hearing over her nomination before the U.S. Senate Banking Committee.
Funds that hold stocks of companies outside the United States attracted $3.1 billion of the total inflows into stock funds while funds that hold U.S. stocks pulled in about $1.05 billion.
While U.S. stocks hit record highs over the weekly period, global stocks outperformed. MSCI's world equity index rose 1 percent, while the Standard & Poor's 500 stock index fell a slight 0.04 percent over the period after dips later in the week.
Yellen's remarks were a "greenlight for risky assets" and drove demand for overseas stocks, said Tjornehoj.
U.S. stocks and gold retreated at the end of the reporting period, however, after minutes from a Federal Reserve policy meeting in October suggested the U.S. central bank could begin to scale back its bond buying in the next few months.
Funds that hold Japanese stocks attracted $527 million in the week ended November 20 after outflows of $4.6 million the prior week. Japan's Nikkei jumped 2.1 percent to a six-month high on November 14 on Yellen's comments.
Funds that hold European stocks attracted $504.3 million. The funds have attracted new cash every week since July. Data released in mid-August showed that the euro zone exited a 1-1/2 year-long recession in the second quarter.
Emerging market stock funds had outflows of $236.3 million, marking a second straight week of withdrawals even as MSCI's global emerging equities index soared 4.1 percent over the week.
Investors pulled $430 million out of taxable bond funds over the weekly period, marking the first outflows from the funds in five weeks. Preliminary figures showed outflows of $425.3 million from the funds.
"Equities have so much more momentum, it's hard to ignore," said Tjornehoj in reference to investors' preference for stock funds over the week. The S&P 500 has risen about 26 percent this year.
Still, high-yield bond funds reaped $782.8 million in new cash, up from the previous week's inflows of $219.4 million. The demand for lower-rated junk bonds underscored investors' appetite for risk, Tjornehoj said.
Low-risk money market funds attracted $846.7 million in new cash after outflows of $3.2 billion the previous week. The funds typically invest in short-dated securities and are viewed as a safe place to store cash. Preliminary figures showed inflows of $740.2 million into the funds.
Commodities and precious metals funds, which mainly invest in gold futures, had outflows of $255.6 million over the reporting period, marking the eighth straight week of outflows from the funds and the biggest withdrawals in three weeks.
Spot gold prices fell 2.3 percent at the end of the weekly period following the release of the Fed minutes.
The weekly Lipper fund flow data is compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds.
(Reporting by Sam Forgione; Editing by Eric Beech and Leslie Adler)