U.S. equity funds see $4.6 bln in outflows -Lipper

by **hlk** Fri 23 Sep 2011, 14:34

NEW YORK: Investors withdrew $4.6 billion from domestic equity funds in the week ended Sept. 21, but added $2.9 billion in international stocks, data from Thomson Reuters' Lipper showed on Thursday.

The bulk of the outflow in domestic equity funds came from exchange-traded funds, suggesting that institutional money fled in a week marked by the downgrade of Italian debt, renewed concerns about Greek debt and sour economic news.

All equity funds combined suffered $1.65 billion in net outflows.

Investors' optimism that Europeans were moving to resolve the region's long-simmering debt crisis and that the Federal Reserve would move to avert economic recession had lifted global markets at the beginning of the five-day period.

"I don't think investors really had the time to have a meltdown," said Tom Roseen, a Lipper senior analyst in Denver.

“My takeaway from this was it could have been a lot worse, as far as outflows go."

But the mood darkened after the Fed said on Wednesday that the U.S. economy faces "significant downside risks."

"The everyday investor felt pretty good for most of the week," Roseen said. "However, the active traders, those were the guys moving the market."

The outflow from domestic ETFs was $4.3 billion, while from domestic non-ETFs, the outflow was just $271 million.

Roseen said the data suggests retail investors are staying conservative, through selective stock selection and staying invested in equities, while continuing to buy municipal bonds.

ETFs also accounted for the bulk of money flowing into international equity funds, at $2.8 billion. Only $101 million flowed into non-ETF international equity funds.

Taxable bond funds took in $2.9 billion, almost evenly divided between ETF and non-ETF funds. Municipal bond funds took in $296 million, almost 93 percent going to non-ETFs.

Money market funds had $15.9 billion in outflows.

Lipper's weekly fund flows data are compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds. – Reuters