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SPDR Gold fund leads ETF inflows-Lipper

by on August 24, 2012 12:37 am BST
 

Thu Aug 23, 2012 8:37pm EDT

By Daniel Bases
    NEW YORK, Aug 23 (Reuters) - Retail investors took a dim
view of U.S. domiciled equity funds during the week ended Aug.
22 while gold's luster increased on  expectations of more
inflation, data from Thomson Reuters Lipper service showed on
Thursday.
    Equity funds pulled in a net $2 billion overall for the
week, but excluding exchange traded funds thought to represent
institutional investor behavior, stock funds had net sales of
$1.52 billion.
     "I think it represents a lack of faith in equity markets.
We saw some selling pressure really build in the spring and ever
since no one has been able to get behind a rally," said Jeff
Tjornehoj, head of Americas Research at Lipper.
    Among ETFs, the State Street SPDR Gold Fund garnered
the most new investment with $1.26 billion in net inflows during
the week.
    In the ex-ETF equity fund sector, investors have pulled cash
out in four of the last five weeks.
    In the course of the reporting week, the U.S. benchmark
Standard & Poor's 500 stock index rose 0.57 percent. The
index is hovering just below four-year highs with the prospect
of more monetary stimulus from the U.S. Federal Reserve on the
horizon potentially fuelling more gains.    
    The Lipper data captures the latest read on stimulus from
the Fed's meeting minutes of July 31-Aug. 1. The report, out on
Wednesday, said there is a willingness to deliver more monetary
stimulus "fairly soon" unless the economy improves considerably.
    The expectation for more stimulus, also referred to as
quantitative easing, would likely take the form of a third round
of bond buying by the central bank. This essentially means
printing more dollars, diluting the currency's value and priming
the pump for future inflation.
    Investors bought SPDR Gold Fund shares ahead of the Fed
minutes to capitalize on inflation pressures that could be
expected to boost gold, which is priced in dollars. 
    The net inflow for this ETF is the 11th largest in its
history and the best intake since late November of last year.
Spot gold prices are trading at their best levels in five
months, hovering around $1,670 an ounce.
    The surge in the Gold Fund's inflows contrasts with the
steady inflow of money garnered by fixed income funds, which 
suffer when inflation rises. However, wariness of equities by
the broader investing public and a weak global economy continue
to support bonds.
    The taxable fixed income fund sector pulled in a net $3.7
billion, up slightly from the prior week while marking their
seventh consecutive week of inflows.
    According to Tjornehoj, taxable bond funds year-to-date have
attracted a net $162 billion. If this were the end of the year
it would represent the third best on record behind 2009's $325
billion and 2010's $217 billion worth of net inflows.
    "I think we'll beat the $217 billion as there is just so
much momentum behind bond fund investing. Even when equity
markets are performing well investors lack the conviction to
follow through with their wallets. It comes down to baby boomers
remaining wary of equities following recent setbacks," Tjornehoj
said.
    The hunt for yield pushed municipal bond fund assets to
record highs in the last week. After attracting a net $435
million for the week, the total assets under management in the
sector hit $573.6 billion, when including funds that report on
both a weekly and monthly basis.
    "A lot of it is the continuous search for yield as they are
higher in after-tax terms than plain-vanilla taxable bonds,"
Tjornehoj said, adding that despite ominous headlines regarding
municipal bankruptcies, default rates still remain low.
    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          2.005     0.07    2,827.122   10,199
 Domestic Equities         2.339     0.11    2,149.662   7,591
 Non-Domestic Equities     -0.335    -0.05   677.460     2,608
 All Taxable Bond Funds    3.743     0.26    1,476.669   4,715
 All Money Market Funds    1.892     0.08    2,298.708   1,422
 All Municipal Bond Funds  0.436     0.14    309.982     1,353