Stock funds worldwide attract $12.4 billion, extending record inflows: BofA

Fri Nov 1, 2013 10:43am EDT
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By Sam Forgione

NEW YORK (Reuters) - Investors worldwide poured $12.4 billion into stock funds in the latest week, extending record inflows into the funds this year to $231 billion, data from a Bank of America Merrill Lynch Global Research report showed Friday.

The inflows into stock funds in the week ended October 30 marked the third straight week of investors seeking more risk in stocks, data from the report showed. The report also cited data from fund-tracker EPFR Global.

The $231 billion inflows into stock funds this year, which are the most since records began in 2002, have dwarfed the previous record inflow of $69 billion in 2010, according to Bank of America Merrill Lynch. The surge also trounced last year's inflows of $36 billion.

The latest demand for stock funds came on expectations that the U.S. Federal Reserve would stick to its current bond-buying program at its October meeting. The central bank extended its $85 billion in monthly bond-buying on Wednesday.

The Fed's easy money policies have helped boost U.S. stock indexes this year to record highs. The stimulus has suppressed bond yields and driven demand for riskier assets such as stocks. The Standard & Poor's 500 index has surged over 23 percent this year.

Demand this year has plummeted for bond funds, however, which have attracted just $16 billion in new money after reaping record inflows of $265 billion last year, according to Bank of America Merrill Lynch.

Starting in May, fears that the Fed would scale back its monthly bond buying triggered a bond market selloff that ultimately pushed the yield on the benchmark 10-year U.S. Treasury note above 3 percent in September from 1.62 percent in early May.

Funds that hold U.S. stocks attracted the biggest inflows in the latest week at $7.6 billion, with much of that new cash flowing into exchange-traded funds, the data showed. The S&P 500 rose 1 percent over the reporting period.   Continued...

Traders work on the floor of the New York Stock Exchange, October 31, 2013. REUTERS/Brendan McDermid