Reluctant investors warmed to stocks in October, stockpiling $19.3 billion in U.S.-based equity funds, marking the first month of positive inflows for the funds since May, when they took in $31.8 billion, Lipper data showed on Thursday.
NEW YORK (Reuters) – Reluctant investors warmed to stocks in October, stockpiling $19.3 billion in U.S.-based equity funds, marking the first month of positive inflows for the funds since May, when they took in $31.8 billion, Lipper data showed on Thursday.
The massive inflows come as third-quarter earnings seem to validate the strong market gains for stocks this year, with earnings estimated to have risen 7.7 percent over the year prior, according to Thomson Reuters I/B/E/S. The S&P 500 is up 17 percent this year, including dividends.
For their part, money market funds, where investors park cash, recorded withdrawals of $21.3 billion in the latest week ended Wednesday, as investors put money to work in equities.
Some investors still expressed concern that traders are chasing lofty markets.
But Garth Nisbet, a senior portfolio manager at Wells Fargo & Co&rsquo-s asset management unit, said the economy is thriving and that there is more upside to come.
&ldquo-There&rsquo-s two things that destroy wealth: market timing and bearishness,&rdquo- he said, referring to market skeptics. &ldquo-This is a fairly market-friendly environment.&rdquo-
U.S.-based stock mutual funds and exchange-traded funds (ETFs) pulled in $3.6 billion during their fourth straight week of inflows. Domestic stock fund inflows of $2.2 billion for the week were the largest since August, according to Lipper.
Nisbet said it is possible that technology stocks are due for a pullback following &ldquo-aggressive&rdquo- gains, led by Amazon.com Inc, and that rising U.S. wages may chip away at corporate profits.
Bond funds, popular for most of this year, saw their appeal fade a bit. Taxable-bond funds took in their 17th straight week of inflows, but just $678 million, down from the nearly $3 billion-a-week average this year.
High-yield bond funds posted $1.2 billion in withdrawals, the most since August this year. Treasury fund outflows of $887 million were the largest since August 2016.
Among developed markets outside the United States, investors favored Japan over Europe. Japanese stock inflows were the largest since February at $501 million, while European equity funds outflows of $404 million were the largest since September, according to Thomson Reuters&rsquo- Lipper unit.
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