By Sam Forgione
NEW YORK (Reuters) - Investors in U.S.-based funds committed just $2 billion to stock funds in the week ended May 28, reflecting investors' wariness of U.S. equities at record levels, data from Thomson Reuters' Lipper service showed on Thursday.
The inflows reversed the prior week's $7.6 billion in outflows, which were the biggest since February, but the inflows were still low compared to recent weeks.
The inflows were modest despite a rally in U.S. stocks on strong U.S. economic data.Stock mutual funds attracted $388 million in new cash, marking the smallest inflow in six weeks, while stock exchange-traded funds attracted $1.6 billion.
Stock mutual funds are commonly purchased by retail investors, while stock ETFs are thought to represent the institutional investor.
"People aren't committing vigorously at the top of the market," said Jeff Tjornehoj, head of Americas research at Lipper.
The benchmark S&P 500 stock index set a new closing high on May 23 and rose 1.2 percent over the weekly period on strong U.S. data on factory activity, housing, and durable goods orders.
Taxable bond funds attracted $2.9 billion in new cash, marking their 12th straight week of inflows, but their smallest inflows in four weeks despite benchmark U.S. government bond yields hitting multi-month lows. Bond yields move inversely to their prices.
"The message in the market has been that even bonds are too expensive," said Tjornehoj. "There's a disbelief that interest rates can go lower, even though they have."
Yields on benchmark 10-year U.S. Treasury notes fell to 2.434 percent on May 28, their lowest level since last July. Funds that specialize in emerging market bonds attracted $331.5 million, marking their third straight week of inflows.
Tjornehoj said that investors have grown more confident in emerging market bonds partly on signs that the Federal Reserve has taken a dovish stance toward monetary policy.
Commodities and precious metals funds, which mainly invest in gold futures, attracted $368 million in inflows, marking their first inflows in nine weeks, despite spot gold posting its biggest daily fall since mid-December on May 27.
Inflows of $600 million into riskier high-yield junk bond funds showed investors still reaching for yields higher than the declining yields on U.S. safe-haven government debt.
Funds that hold floating-rate bank loans, which are protected from rising rates by being pegged to floating-rate benchmarks, posted $475 million in outflows, marking their third straight week of withdrawals.
Tjornehoj said that investors who had jumped into the funds on fears of rising rates have continued to exit them as rates have continued to fall.
The weekly Lipper fund flow data is compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds.
(Reporting by Sam Forgione; Editing by Grant McCool)