Money surged into both conventional equity funds and so-called exchange traded funds this week, in another sign that a bit of speculation has returned to the market.
AMG reports inflows of $4.3 billion for the week ended Nov. 10, up from $2.3 billion last week. TrimTabs says equity funds took in $3 billion, a sharp rise from last week's intake of $1.8 billion. Meanwhile, money market funds suffered substantial outflows as money moved off the sidelines and into what has been a rising market since President Bush's re-election.
Analysts say inflows substantially above the $1 billion range point to speculation in the market, while flows below that level are more often the result of automatic purchases in employee retirement accounts. A $1 billion move might seem dramatic, but it is not considered to be out of the ordinary in the $7.5 trillion mutual fund market.
"Besides the pickup in conventional fund flows, cash has been pouring into exchange traded funds at a rate near the highest of the year," states Carl Wittnebert, director of research at TrimTabs. "So the weekly flow into all equity mutual funds was over $7 billion."
TrimTabs says equity funds that invest primarily in U.S. stocks had inflows of $2.6 billion, compared with inflows of $1.8 billion the prior week. International equity funds had inflows of $410 million, substantially better than last week's take of $31 million.
Taxable bond funds reported net cash inflows totaling $721 million, with most going to high-yield corporate bond funds, $600 million, and international funds, $172 million, according to AMG.
Health care/biotech funds reported inflows of $50 million, marking their first gain in seven weeks.
AMG says money market funds reported outflows of $6.6 billion, with taxable money funds reporting outflows of $8 billion. That was in part offset by $1.4 billion of inflows into tax-exempt money funds. Municipal bond funds reported net cash outflows of $297 million.