Mixed Picture on Fund Flows

The most recent fund data covers a period when the major indices continued to hit new lows for the year, but not the market's major rally Thursday.

In particular, the Trim Tabs survey showed net outflows of U.S. equity funds, while international ones recorded net inflows. AMG's data also showed international funds benefiting as almost $300 million moved into the group, particularly Japan-oriented funds.

Kunal Kapoor, director of mutual fund analysis at Morningstar, said the move to international funds reflected portfolio managers' forecasts for better returns in other markets and investors' decision to chase the outsized returns of emerging markets, particularly through funds investing in China.

"Folks are concerned about the weak dollar, and they are trying to make these moves because of that," he said. "But we have also heard from portfolio managers that it's easier to find opportunities in international markets."

A closer look at the Trim Tabs data also helps illustrate this point. U.S. equity fund outflows were $2.1 billion in the last week, compared to $1.6 billion for the week ended March 17. But in the latest week, international equity fund inflows nearly quadrupled to $402 million.

Recent fund outflow data has raised the usual questions about whether investors are being a bit too reactionary in adjusting their portfolios, ignoring long-held principles about long-term investing and proper asset allocation.

Many investment banks and fund managers are a bit heavy on the equities side of their portfolios at the moment, with slightly more than the typical 60% allocation to equities and slightly less than the conventional benchmark 40% allocation to fixed income. Some managers, however, are shifting their stock holdings into more defensive sectors, such as health care, utilities and energy, while scaling back on technology, financial services, industrial and basic materials.