By Trevor Hunnicutt
NEW YORK (Reuters) - Investors turned on U.S.-based stock funds in the latest week, pulling $2.1 billion from the funds just one week after the funds posted their first inflows of the year, Lipper data showed on Thursday.
"Retail investors have been leery about equity for some time," said Jeff Tjornehoj, head of Americas research for Lipper. "They want to see a sustained rally."
While mutual fund investors pulled nearly $4 billion from stock funds during the last week, exchange-traded fund investors added money to those funds for a third straight week. ETF flows are seen as representing institutional trading behavior more so than mutual funds.
Overall, the outflows in the week to March 16 hit U.S.-based international stock funds hardest. Those funds posted $2.9 billion in outflows during the week, Lipper said.
European stock funds posted nearly $1 billion in outflows, while Japanese stock funds posted $597 million in outflows, Lipper said, a seventh straight week of outflows for both categories as easy monetary policy in both regions has failed to lift U.S. investors' spirits.
Emerging-market stock funds posted $408 million in outflows after taking in $1.6 billion the week before. Precious metals commodity funds attracted $173 million during the week, for a 10th straight week of new cash, according to Lipper.
Funds focused on healthcare and biotechnology shares posted $850 million in outflows during a week that saw the value of shares of troubled drugmaker Valeant Pharmaceuticals International Inc (NYSE:VRX) halved in one day alone. Financial sector funds posted $709 million in outflows, Lipper said.
Overall, though, on a net basis domestic-focused stock funds in the United States took in $755 million, Lipper data showed.
U.S.-based taxable bond funds attracted $4.1 billion during the same period measured by Lipper, for an eighth straight week of inflows.
High-yield bond funds added a fifth week to their streak of inflows, adding $1.7 billion in new cash. Higher-grade bond funds took in $2 billion. Treasury funds posted $135 million in outflows, a third straight week of outflows, the data showed.
Emerging-market debt funds took in $190 million, Lipper said, as the U.S. Federal Reserve said it would hold interest rates steady.
Relatively low-risk money-market funds posted $36 billion in outflows during the week, the category's largest outflows since February 2014, the fund research service said.
Tjornehoj said the outflows were driven by institutional investors, but it was unclear whether those investors are deploying the cash to buy riskier assets.