NEW YORK (Reuters) – U.S.-domiciled equity funds had outflows of $2.55 billion in the week ended October 17, with most of the losses stemming from an exchange-traded fund that tracks the benchmark S&P; 500, data from Thomson Reuters’ Lipper service showed on Thursday.
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The State Street SPDR S&P; 500 ETF bled $2.1 billion in outflows, while ETFs overall posted net outflows of $2.75 billion.
Stock mutual funds, meanwhile, had net inflows of $196 million over the reporting period, which were modest but still the first new cash into the funds in ten weeks.
ETFs are generally believed to represent the investment behavior of institutional investors, while mutual funds are thought to represent retail investors.
The $2.55 billion in outflows from equity mutual funds and ETFs combined is a reversal from the previous week’s net inflows of $1 billion, when strong inflows of $2.1 billion into ETFs overshadowed outflows of $1.1 billion from stock mutual funds.
“Some of it is investors just taking a breather,” said Tom Roseen, head of research services at Lipper, who cited concerns over the U.S. presidential election, weak corporate earnings for technology companies, and uncertainty over Spain’s debt burden.
Still, the S&P; 500 rose roughly 2 percent during the reporting period while demand for safe-haven U.S. Treasuries fell after corporate earnings picked up and rating agency Moody’s affirmed an investment-grade sovereign rating on Spain.
Unlike their stock counterparts, taxable bond funds had net inflows of $4.46 billion, with $3.35 billion invested in mutual funds and the remainder in bond ETFs. The $4.46 billion in new cash is the highest weekly net inflow so far this month.
Investors put $2.4 billion into investment-grade corporate bond funds, the most on a record that spans nearly 21 years. Of that sum, $1.41 billion went into investment-grade corporate bond mutual funds, and the rest was put into ETFs.
Investors showed some appetite for risk in flexible income funds, which can invest in a wide range of securities across the risk spectrum. The funds had inflows of $606 million.
“People were willing to step up on the risk spectrum a little bit and go for the higher yields,” said Roseen, who added that the ZEW Institute’s monthly survey showing better-than-expected improvement in German investor confidence and a rise in retail sales in September were reassuring.
Government-guaranteed mortgage bond funds, which hold the same assets that the U.S. Federal Reserve has targeted for purchases of $40 billion per month under its stimulus plan, continued to gain inflows and attracted $654 million.
(Reporting by Sam Forgione; Editing by Phil Berlowitz)