Investors continue to prefer equity to bond funds, ICI data show

But fixed-income outflows slow to $2.09B for week ended Aug. 7
AUG 21, 2013
Flows to long-term mutual funds continue to reflect a preference for equities over fixed income, according to estimates from the Investment Company Institute. With continued uncertainty surrounding the expiration date of the Federal Reserve's monetary stimulus program, bond funds experienced estimated outflows of $2.09 billion for the week ended Aug. 7, following almost $7 billion in outflows the previous week. Four regional Federal Reserve presidents have now proclaimed that the bond purchases could slow sooner rather than later. “Nobody wants to sit around waiting for rates to go up again,” said Tony Scherrer, director of research and co-portfolio manager at Smead Capital Management. “But we consider it a bit reactionary.” On the other hand, ICI estimated equity funds inflows at $3.41 billion for the week ended Aug. 7, following inflows of $711 million the week before. Most of the inflows, $3.05 billion, went to world equity funds, while just $355 million flowed to domestic equity funds. Hybrid funds experienced estimated inflows of $1.32 billion for the week ended Aug. 7, compared with inflows of $1.74 billion the previous week. “The numbers are consistent with what we've seen,” Mr. Scherrer said. “Investors are taking risks in esoteric places.”

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