Despite a noticeable uptick in the bumpiness of the equity markets, investors added nearly $9 billion to stock funds recently while moving funds out of U.S. Treasuries, according to Lipper data for the week ending April 9. A week earlier, U.S. investors put close to $5.5 billion into stock funds, as was as almost $4 billion into taxable bond products.
In early April, when market volatility rose, investors chose to take more than $225 million out of commodities and precious-metals funds. They also withdrew more than $11 billion from money markets. At the same time, as issues plagued Ukraine and Russia, emerging-market funds drew over $2.2 billion in inflows.
Judging from such behavior, investors seemed confident the trends of fund performance in the first quarter of 2014 would continue. During the period, equity funds were just able to post their seventh consecutive quarter of positive returns.
The strongest performers were commodities-agriculture funds (16.15%) and precious-metals equity funds (12.21%).
Funds that weakened most in the period included dedicated short-bias funds (-4.56%), Japanese funds (-4.45%) and China region funds (-4.40%).
After a strong run-up in 2013, especially in the fourth quarter, investors “cautiously continued to bid up the market in first quarter 2014,” says Tom Roseen, head of research services for Denver-based Lipper.
“While investors began to take some of their hard-won profits off the table during first quarter 2014—adding volatility to the market, they continued to inject net new money into the fund industry … to the tune of $41.5 billion,” Roseen explained in his latest quarterly report.
Investors were “forced to weigh the conflicting economic news,” he adds. “While much of the news showed an economic softening attributed to the strong winter storms in the U.S. this year, others showed a picture of a ‘plow–horse’ economy, continuing to amble along.”