Stock, bond funds attract $5.5 billion over weekly period: Lipper

By Trevor Hunnicutt

NEW YORK (Reuters) - Stock and corporate bond funds pulled in $5.5 billion in new money from investors in the week that ended Wednesday, according to data from Lipper on Thursday.

Investors poured $2.5 billion into U.S.-based stock mutual funds and exchange-traded funds after the category posted $8 billion in outflows the prior week.

Taxable-bond funds took in $3 billion over the same period, their second consecutive week of attracting new money, Lipper said.

High-yield bond funds also continued to find favor with investors, drawing $1.5 billion during the week.

The inflows suggested that investor appetite for risk increased on fresh signs the Federal Reserve could delay raising rates in December because of a weakening U.S. and global economy. New York Federal Reserve President William Dudley said on Thursday recent data suggests the U.S. economy is slowing, as inventories, dollar appreciation and sluggish global growth hold the U.S. economy back.

Greg Peters, who helps manage more than $550 billion in assets as senior portfolio manager at Prudential Fixed Income, said Wednesday that junk bonds look interesting, given widening spreads against low interest rates and the Fed's slowness in raising short-term interest rates.

The yield gap between junk debt and Treasuries is now 6.31 percentage points, compared with about five points at the start of this year, according to the BofA Merrill Lynch High Yield index.

Jeff Tjornehoj, head of Americas research for Lipper, said ETF investors showed optimism this week.

"The ETF investor this week seemed to be more aggressive," said Tjornehoj.

Stock ETFs took in $4.7 billion during the last week, while mutual funds saw $2.2 billion in withdrawals.

Exchange-traded funds are thought to represent institutional investors, including hedge funds, mutual funds are the province of retail investors.

(Reporting by Trevor Hunnicutt; Editing by Louise Ireland, Jennifer Ablan and Steve Orlofsky)

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