Stock funds worldwide attract $7.5 billion inflows: Bofa

Fri Mar 7, 2014 12:06pm EST
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NEW YORK (Reuters) - Investors worldwide poured $7.5 billion into stock funds in the week ended March 5 on reassuring signs the U.S. economy was on firm footing and reduced geopolitical tensions, data from a Bank of America Merrill Lynch Global Research report showed Friday.

Inflows in the week ended Wednesday marked the fourth straight week of new cash into the funds, according to the report, which also cited data from fund tracker EPFR Global.

"People are growing sanguine about global growth," said Chris Konstantinos, head of international portfolio management at RiverFront Investment Group in Richmond, Virginia.

The net inflows into stock funds showed investors' conviction that stocks, which hit record highs over the weekly period, could continue to rally on a stronger U.S. economy.

The Standard & Poor's 500 .SPX stock index hit records and rose 1.6 percent over the weekly period on some strong U.S. economic data. It was also helped by comments from Federal Reserve Chair Janet Yellen that cold weather was behind recent weakness in the U.S. economy, and by reduced fears of armed conflict between Russian and Ukraine.

Meanwhile, investors pulled $3.8 billion from emerging market stock funds, extending those funds' record outflow streak to 19 weeks. Japanese stock funds posted $400 million in outflows, their first withdrawals this year.

MSCI's index of global emerging market stocks .MSCIEF rose 0.3 percent over the period, despite being hit by the tensions in Russia and Ukraine. Japan's Nikkei average .N225 fell 0.5 percent over the period.

"The market is voting with its feet about the types of structural headwinds emerging markets face," said Konstantinos, adding the Fed's expected taper of asset purchases, and lower Chinese growth, are negative for emerging market stocks.

Funds that specialize in European stocks attracted $600 million, their smallest inflows in 16 weeks, but extending their inflow streak to 36 weeks.   Continued...

A dealer works on the trading floor at IG Index in London May 10, 2010. REUTERS/Suzanne Plunkett