Institutional investor slow equity fund buying – Lipper

by on September 27, 2012 9:55 pm BST

Thu Sep 27, 2012 5:55pm EDT

NEW YORK, Sept 27 (Reuters) - Institutional investors slowed
their buying into equity funds in the week ended Sept. 26, as
retail investors kept dumping the riskier assets, data from
Thomson Reuters Lipper service showed on Thursday. 
    U.S.-domiciled equity funds recorded net inflows of $1.136
billion in the reporting period.
    But that came entirely on the back of $2.434 billion net
buying of exchange-traded funds - which was itself a steep
drop-off in net ETF buying of recent weeks.
    Excluding ETFs, equity funds saw net outflows of $1.297
    ETFs are generally believed to represent the investment
behavior of institutional investors, while mutual funds are
thought to represent retail investors.
     It's possible that institutional investors, eyeing recent
encouraging housing data, are willing to put money into riskier
assets now on hopes the U.S. recovery is picking up steam, said
Tom Roseen, head of research services at Lipper. 
    "I think this is people buying on the dip," he said. Despite
concerns about the euro zone debt crisis and uncertainty around
the U.S. elections, institutional investors could be willing to
add risk, he said.
    In contrast, retail investors have been more hesitant, he
said. This was the seventh straight week that retail investors
dumped equity funds.
    "A lot of people were very fearful of September. Septembers
have traditionally been horrible," he said. "People are just
very reluctant, and it's because they have been burned so bad"
during the financial crisis.
    In addition, older investors could be rebalancing their
portfolios and moving into fixed income instead, he added.   
    "America's getting grayer, and as that happens people move
into more, I think, fixed income and probably less volatile
types of securities," Roseen said.
    The S&P 500 fell 1.9 percent over the reporting
period as worries about global growth came to the fore and a
rally after the Federal Reserve launched another stimulus round
    Money market funds notched a net entry of $3.939 billion,
for a third week of net inflows out of four. 
    Taxable bond funds, considered something of a safe haven
with interest rates at record lows, saw net gains of $4.016
billion, just under the rate of inflows in recent weeks.   
    Corporate high-yield funds saw net outflows of about $310
million, their first such loss after 15 weeks of gains. 
    But investment grade corporate bond funds had inflows of
$2.29 billion, a 15th straight week of net gains.      
    Municipal bond funds had net gains of $592 million. Since
September of last year, those funds have had net outflows in
only three separate weeks.   
    Excluding ETFs, equity income funds pulled in a net $145
million. Net gains edged down to about $141 million when ETFs
are included. 
    Equity income funds have been relatively consistent gainers
over recent years, providing an alternative for yield-hungry
investors balking at record-low interest rates.
  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          1.136     0.04    2,868.936   10,039
 Domestic Equities         0.941     0.04    2,178.963   7,447
 Non-Domestic Equities     0.196     0.03    689.973     2,592
 All Taxable Bond Funds    4.016     0.28    1,458.850   4,615
 All Money Market Funds    3.939     0.17    2,324.400   1,399
 All Municipal Bond Funds  0.592     0.19    311.730     1,336