By Daniel Bases and Sam Forgione
NEW YORK, Oct. 11(Reuters) - U.S.-domiciled equity fundspulled in a modest $1 billion in the week ended Oct. 10, withmuch of the fresh cash moving into gold and energyexchange-traded funds (ETF), data from Thomson Reuters' Lipperservice showed on Thursday.
Taxable bond funds pulled in nearly $2.3 billion in newcapital, extending their inflow streak to 14 weeks, withsizeable new investment in government-backed mortgage andcorporate investment grade sectors.
For the first time in many weeks both retail andinstitutional investors were on the same wavelength when it cameto equities in general. They were sellers.
Excluding ETF activity, retail investors pulled a net $1.1billion from equity funds. At the same time the broad-basedequity ETFs such as State Street's SPDR S&P 500 ETF fund
had outflows of $939 million while the Invesco Powershares QQQTrust 1 ETF
had net redemptions of $555 million.
ETFs are generally believed to represent the investmentbehavior of institutional investors, while mutual funds arethought to represent the retail investor.
U.S. stock markets were undermined by the concerns of weakdemand affecting corporate profits. The International MonetaryFund cut global economic growth forecasts for the second timesince April to 3.3 percent, adding that unemployment is likelyto remain elevated because of the weak activity.
"People are preparing for maybe a worse-than-expectedearnings season as a whole," said Matthew Lemieux, analyst atLipper.
Retail mutual funds have had net sales 11 out of the past 12weeks while institutional investors have been buyers of ETF'smarginally more than sellers of these funds over the same periodof time.
In the course of the reporting week, the U.S. benchmarkStandard & Poor's 500 stock index fell 1.27 percent
. TheNasdaq stock market, which is often seen as a proxy fortechnology companies, slid 2.6 percent.
In the fixed income sector, funds investing in U.S.Treasuries suffered net outflows of $1.12 billion, their worstperformance in over three months. However, government guaranteedmortgage backed bond funds maintained their appeal with $648million in net inflows, extending their unbroken streak of freshcapital to nearly one year.
Money market funds had net outflows of $506 million whiletax-free municipal bond funds pulled in $915 million, extendingtheir inflow streak to six months.
The buying of gold funds came in contrast to a loss over thecourse of the reporting week in spot gold prices, which fellover $15 an ounce to $1,762.74. Prices rose slightly since then.
"Gold fell, but it's still seen as a hard asset. So, in themedium to long term, if you still consider inflation an issue,then eventually you're betting that that price is going to goup," Lemieux said on the inflows into gold exchange-tradedfunds.
State Street SPDR Gold Fund
had its best week sincelate August with $939 million in new cash moving into the fund,despite the drop in the cash market price.
Central banks, in particular the U.S. Federal Reserve andthe European Central Bank, have maintained a steady policy oflow interest rates and monetary stimulus that some investorsbelieve will inevitably lead to rising inflation. Gold, pricedin U.S. dollars, is seen as way to safeguard against inflation.
The 3.5 percent rise in crude prices over the course of theweek helped draw in $594 million in fresh cash to the StateStreet Energy SPDR ETF
The weekly Lipper fund flow data is compiled from reportsissued by U.S.-domiciled mutual funds and exchange-traded funds.
The following is a broad breakdown of the flows for theweek, including exchange-traded funds (in $ billions):
Sector Flow Chg % Assets Count($Bil) Assets ($Bil)All Equity Funds 1.009 0.03 2,873.324 10,089Domestic Equities -0.214 -0.01 2,181.221 7,481Non-Domestic Equities 1.224 0.18 692.103 2,608All Taxable Bond Funds 2.279 0.15 1,476.030 4,652All Money Market Funds -0.506 -0.02 2,281.675 1,400
All Municipal Bond Funds 0.915 0.29 314.489 1,338
(Reporting By Daniel Bases and Sam Forgione; Editing by M.D.Golan)
Keywords: INVESTING FUNDFLOWS/LIPPER