U.S. stock funds attract first overall inflows since April: Lipper

U.S. stock funds attract first overall inflows since April: Lipper

NEW YORK (Reuters) - Investors charged into domestic stocks during the latest week, delivering U.S.-based stock funds their first inflows since late April, Lipper data showed on Thursday.

The funds took in $7.8 billion, according to the research service's data, which covers the seven days through July 13. The inflows into stock funds were led by heavy buying of exchange-traded funds and funds focused specifically on domestic stocks, Lipper found.

Pat Keon, research analyst for Thomson Reuters Lipper, said U.S.-domiciled funds - including both mutual funds and ETFs - took in $33.5 billion of net new money for the fund-flows week.

ETFs are typically representative of institutional buying.

"This was the largest positive weekly net inflow of the year coming in at over twice that of the $16.6 billion net inflow for the fund-flows week ended January 27, 2016," Keon said. "Of note, equity funds broke a 10-week streak of net outflows by taking in $7.8 billion in net new money and municipal bond funds recorded their 41st straight week of inflows as they grew their coffers by $1.2 billion."

During the latest reporting period all-time highs were set in both the Dow Jones Industrial Average and the Standard & Poor's 500 index.

Keon said the "Brexit" vote, Britain's decision on June 23 to leave the European Union, has played a major factor in non-domestic cash withdrawals.

Non-domestic equity mutual funds saw money leave the group for the third straight week "as they continue to feel the effects of the Brexit vote," Keon said. "Since the vote, non-domestic equity funds have suffered net outflows of $5.5 billion - including $1.5 billion this week - which has reduced their year-to-date net inflow to $2.5 billion," he said.

Investors also continued their distaste for U.S.-based stock mutual funds, pulling $7.5 billion in the latest week, their 18th consecutive week of cash withdrawals, Lipper said.

Larry Fink, chairman and chief executive of BlackRock, the world's largest asset manager, said on CNBC on Thursday that the stock market rally has been supported by institutional investors covering shorts, or bets that stocks would fall, and not individual investors feeling bullish.

"Since Brexit, we've seen ETF flows almost at record levels," Fink said. "However, in the mutual fund area, we're continuing to see outflows."

Overall, investors have been cherry-picking yieldier assets as market participants believe the Federal Reserve "will not entertain raising rates in the foreseeable future due to Brexit uncertainty," Lipper's Keon said.

High-yield junk ETFs posted inflows of $2.6 billion in the latest reporting period, while high-yield junk bond mutual funds attracted $1.8 billion, according to Lipper. In addition, high-yield muni debt funds posted inflows of $317 million, Lipper said.

U.S.-based investment-grade bond funds took in $2.9 billion over the weekly period, the largest intake for the funds since late April. U.S.-based emerging markets debt funds attracted $485 million over the weekly period, their largest haul since March, and U.S.-based emerging markets equity funds took in $1.7 billion over the weekly period, their largest intake in a month, Lipper said.

Even so, low-risk U.S.-based money market funds attracted $15.8 billion over the weekly period, after $34 billion of outflows the previous week, Lipper said.

(Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and Grant McCool)