ETFs erase stock withdrawals on economy

Investors who beat a path out of global equity markets earlier this year are stampeding back in.

Mar 13, 2014 @ 10:46 am

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Investors who beat a path out of global equity markets earlier this year are stampeding back in.

More than $41 billion has returned to U.S. exchange-traded funds that own shares in the past four weeks, reversing withdrawals that swelled to as much as $40.2 billion last month, according to data compiled by Bloomberg. Cash has flowed back as the MSCI All-Country World Index rallied 5.8%from the four-month low it reached Feb. 4, when turmoil in emerging markets spurred speculation the global recovery would slow.

The reversal is the latest sign of confidence in a five- year bull market that has gained momentum amid 11 straight quarters of expansion in U.S. gross domestic product. The MSCI gauge this month reached its highest level since 2007 after investors blamed cold weather for U.S. retail sales and housing data that trailed economists’ forecasts while world leaders pledged to maintain accommodative policies to spur growth.

“Dwindling outflows show investors regaining confidence that the global economy is going to grow,” Joseph Quinlan, the chief market strategist at Bank of America Corp.’s U.S. Trust, which oversees about $330 billion, said. “When you look at growth in the U.S., this is emblematic of one economy pulling other economies along.”

About $1.5 billion was deposited to global equity ETFs on March 11, bringing the total inflows for the month to $15.3 billion, data compiled by Bloomberg show. Investors pulled almost $15 billion out of the funds in January and the MSCI All- Country World Index was down as much as 5.8% through Feb. 4 after Argentina unexpectedly devalued the

(Bloomberg News)

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