US stock funds get most cash since 2014

Investors poured $24.1 billion (Dh88 billion) into US-based stock funds in the week to December 27, Lipper said on Thursday, sending a gift to equity markets that recorded a year of double-digit percentage gains.

This marks the largest week of inflows for mutual funds and exchange-traded funds (ETFs) collectively since December 2014, according to the Thomson Reuters research service, and comes after US lawmakers finalised a massive corporate tax cut that markets admired.

Cash is also shuffling around during a typically active period for funds, despite holidays, as investors plan for taxes and report end-of-year performance statistics. Equity fund outflows totalled $22.2 billion the week prior.

Inflow and outflow

The flow result counters the dominant trend in USbased funds this year — a reticence to buy stocks at home despite an S&P500 index poised to deliver a 2017 return of more than 20 per cent.

Domestic stock funds posted an estimated $23.4 billion in outflows for the year, according to Lipper, compared to $165 billion inflows for their counterparts invested abroad and $283 billion inflows for funds for taxable bonds.

“You see people attracted to equities, but they’re not backing up the truck to buy equities at 20-times earnings,” said David Lafferty, chief market strategist at Natixis Investment Managers, referring to the seemingly rich price-to-earnings ratio of the S&P 500. “I don’t see any euphoria.”

Last week, however, domestic equity funds pulled in nearly $18 billion, compared to $6.4 billion to their internationally oriented peers, according to Lipper.