Investors Jump Into Stocks at Record Pace With Correction Behind

(Bloomberg) -- The good times have returned for stock funds, weeks after the first correction in two years.

Equity funds enjoyed a record $43.3 billion inflow in the week to March 14, Bank of America Merrill Lynch said in a report, citing EPFR Global fund flow data. U.S. stock funds saw $34.6 billion of new money, an unprecedented amount, suggesting confidence in the economic outlook in spite of trade tensions and personnel shifts in the Trump administration.

A bumper U.S. payroll number at the end of last week signaled the U.S. labor market remains strong and will keep driving economic growth. Accompanying wage growth figures showed a cooling from a pace that spurred financial turbulence last month on concern that the Federal Reserve could raise interest rates faster.

Still, the S&P 500 is on track for a loss this week, down 1.4 percent as of Thursday’s close. Trump’s sudden firing of U.S. Secretary of State Rex Tillerson and his appointment of Larry Kudlow as economic adviser has raised concerns about increasing trade protectionism.

It’s not just U.S. stocks that are in high demand. Investors added to Japanese funds for a fifteenth straight week, bringing year-to-date inflows to $31 billion. Emerging market equities have seen $41 billion of investment so far this year.

There may still be signs that the volatility of earlier this year isn’t over, however. Investors took money out of high-yield bonds for the ninth straight week -- the longest streak since 2007, when the global financial crisis began. While overall bond flows were positive, buyers were sticking to investment grade and, to a lesser extent, government securities. The figures added to evidence of concerns about credit.

To contact the reporter on this story: Cormac Mullen in Tokyo at cmullen9@bloomberg.net.

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Adam Haigh

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