Lipper Fund Flows: Earnings Disappointments Send Investors in Quest of Safe Havens

REUTERS/Kai Pfaffenbach

Investors found little to celebrate among last week’s crop of earnings reports, and sought refuge amid several big market selloffs in the safer area of bond funds, according to the past week’s fund flows data from Lipper.

Investors appear increasingly worried and uneasy by a string of high-profile earnings reports from companies that are announcing big declines in profits, sometimes in tandem with “misses” on earning estimates, revenue estimates or both. That weighed on major stock indexes in the week ended October 24, and it also caused investors to pull money out of equity funds, according to data released late yesterday by Lipper.

Net withdrawals from equity mutual funds totaled $200 million for the week ended October 24 while ETF investors yanked over $4.5 billion from their investments, mostly from the SPDR S&P 500 (SPY), which accounted for $5.5 billion in outflows. Domestic mutual funds saw withdrawals of $806 million in the period; non-U.S. stock funds managed to pull in about $605 million.

With the pendulum clearly swinging toward the “risk off” end of the spectrum once more, taxable bond funds reported one of their strongest weeks of inflows so far this year as investors contributed a net $3.6 billion. “Risk off” means shying away from junk bonds, where the credit risk again began to prey on investors’ minds to the extent that they were willing to forfeit potential gains in yield. That kept inflows to only $86 million, compared to net inflows into corporate investment-grade bond funds of $1.3 billion.

Fixed income ETF investors were no different and tended to pull money from high-duration Treasury products and put it to work in corporate investment-grade and municipal bond products. Junk bond ETF stalwart JNK had outflows of over $120 million for its fourth week of outflows in the past five.

For more information on this week’s fund flows data, please refer to Lipper’s fund flows information or this video.