Investors pumped the most into US stock funds in more than a year, even as US lawmakers wrestled with the looming 'fiscal cliff' of combined tax hikes and spending cuts, data from EPFR Global showed yesterday.
Worldwide, stock funds took in a massive $14.86 billion in the week ended November 28, the second-largest total since 2008, reversing the prior week's outflows of $7.74 billion, the fund-tracking firm said.
Since 2008, that amount was topped only by the $17 billion that poured into stock funds in the week ended September 19, when the Federal Reserve announced an extension of its stimulus plan.
Funds that hold US stocks accounted for $10.52 billion of the overall flows into stock funds in the latest week, the most in roughly 16 months, according to the data firm.
"There's a sense that if Washington can actually do its job - if you remove that sword of Damocles from over the economy - we might actually get a nice boost at the start of next year," said Michael Jones, chief investment officer of RiverFront Investment Group, on the fiscal cliff talks.
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Bond funds worldwide still managed to attract $5.17 billion in new investor cash, the most in two weeks, with $2.54 billion of that sum invested in US bond funds. High-yield 'junk' bond funds raked in $1.14 billion in new cash, reflecting broad demand for risk assets and reversing outflows of $1.45 billion from the funds the previous week.
"People are so starved for yield, and as prices in high yield fall and the yield rises, inevitably people start buying," Jones said.
The benchmark S&P 500 rose 1.36 per cent over the reporting period despite uncertainty over whether US President Barack Obama and Congress would reach a deal on the fiscal cliff. Obama reassured markets on Wednesday when he said he hoped to close a deal in four weeks.
