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Institutional, retail investors dump equity funds-Lipper

by on July 26, 2012 10:09 pm BST
 

Thu Jul 26, 2012 6:09pm EDT

NEW YORK, July 26 (Reuters) - Institutional and retail
investors dumped equity funds in the week ended July 25, as
fears that the euro zone debt crisis could envelope larger
economies rattled markets, data from Thomson Reuters' Lipper
service showed on Thursday. 
    Equity funds recorded net outflows of $11.27 billion in the
week, the biggest exodus since September last year, including   
 $9.216 billion exiting from exchange traded funds. 
    Excluding ETFs, retail investors sold a net $2.054 billion
of equity funds.     
    ETFs are generally believed to represent the investment
behavior of institutional investors, while mutual funds are
thought to represent the retail investor.
    Fears that difficult finances among Italy's regions could
hurt the central government sharpened during the reporting week,
with Prime Minister Mario Monti imposing a compulsory plan to
restore financial stability to Sicily. 
    The worrisome news during the reporting period wasn't
confined to shaky economies, with Moody's Investors Service
warning it could cut the Aaa ratings of Germany, the Netherlands
and Luxembourg on the euro zone's debt crisis. 
    "It really cast a pall over the market a bit," said Tom
Roseen, head of research services at Lipper.
    The outflows from retail investors included a net exit of
$141 million from non-domestic equity funds, Roseen noted, the
first such redemption in 17 weeks.
    "This is one of the times that people said, 'This really is
a European debt issue, maybe we should back away,'" he said.
    The S&P 500 fell four days out of the five trading
sessions in the reporting period, losing 2.54 percent for the
week as Italy's financially-troubled regions stoked fears the
euro zone's third biggest economy could find its debt load
unsustainable.
    Money market funds continued their seesaw pattern, gaining
$13.698 billion, despite losses in the previous week. 
    Taxable bond funds, something of a safe haven in the record
low interest rate environment, saw net inflows of $3.087
billion, the third straight week of net gains. 
    As has been the case in recent weeks, though, retail
investors poured in most of that money, far outstripping
institutional investors.     
    Corporate high-yield funds racked up net inflows for a
seventh straight week, with net buying of $2 billion. Investment
grade corporate bond funds pulled in a net $1.1 billion, largely
in line with net inflows over the past two weeks.    
    Municipal bond funds had net inflows of $810 million - a
15th straight week of net gains.   
    Excluding ETFs, equity income funds pulled in a net $233
million, less than half the $628 million in the previous week.
The figure rises to a net inflow of $586 million when ETFs are
included. 
    Equity income funds have seen net inflows for almost every
week of the past year, providing an alternative method of
gaining returns for yield-hungry investors balking at record low
interest rates.  
    "People are still looking for dividends," Roseen said.
"They're pulling out all the stops anywhere they can to try to
get that extra piece of yield."
    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          -11.270   -0.41   2,671.335    10,243
 Domestic Equities         -11.464   -0.54   2,045.333    7,659
 Non-Domestic Equities     0.194     0.03    626.002      2,584
 All Taxable Bond Funds    3.087     0.21    1,444.298    4,701
 All Money Market Funds    13.698    0.61    2,269.688    1,415
 All Municipal Bond Funds  0.810     0.27    307.623      1,352