Investors Resume Stock Fund Purchases

In an about-face, investors pumped money into domestic stock funds over the past week; although the trend could prove short-lived.

Funds that invest in U.S. stocks pulled in over $5.25 billion during the week ended Wednesday, net of redemptions, according to TrimTabs Investment Research of Santa Rosa, Calif.

The new mony partially offset the nearly $14.86 billion investors redeemed in the week before.

"Investors in equity mutual funds turned bullish December 21 after having redeemed over $25 billion from U.S. equity funds in the first part of the month," says Charles Biderman, chief executive officer of TrimTabs. But despite the gains of the last week, "if [the December 27th] sell-off lasts, we expect outflows to resume as soon as tomorrow."

The Dow Jones Industrial Average closed at 13551.69 Wednesday, up from 13207.27 on Dec. 19.

Funds that invest primarily in non-U.S. stocks took in over $1.73 billion of new money, after investors pulled more than $6.81 billion last week.

TrimTabs is estimating U.S. equity funds will have a net $22 billion in total redemptions in December. It expects global equity funds will give back roughly $3 billion.

Bond funds saw $1.3 billion walk out the door during the week ended Dec. 26, after giving up nearly $1.97 billion during the week before.

Hybrid funds, which invest in a mix of stock and bonds, gave up $856 million, mirroring the $860 million that investors redeemed the previous week.