Retail investors poured money into U.S.-based stock funds for a fourth straight week, but institutional investors shied away from those assets, adding to outflows in the previous week, data from Thomson Reuters' Lipper service showed on Thursday.
_0">Stock mutual funds attracted $5.06 billion in net new cash for the week ended January 15, the largest such inflows since the end of last year.
In contrast, stock exchange-traded funds saw net outflows of $1.4 billion, a sharp pickup after such funds saw a modest $2.5 million exit in the previous period.
Mutual funds are often considered to represent the behavior of retail investors, with ETFs considered more representative of institutional investors.
Institutional investors may have thought stocks were overbought or they wanted to avoid risks, such as no trading on the upcoming U.S. market holiday on Monday, January 20, said Tom Roseen, head of research services for Lipper, a Thomson Reuters company.
"They basically bailed on domestic equities," he said.
The Standard & Poor's 500 stock index rose 0.6 percent from the close of January 8 through the close of January 15.
But with the index rallying almost 30 percent last year, many investors wonder whether the advance in stocks has much more room to run - especially as the U.S. Federal Reserve pulls back in coming months from its $85 billion-per-month asset buying program.
That flood of money from the Fed last year helped buoy riskier assets. But stocks could struggle this year without such support.
Municipal bond funds notched net inflows for the first time since the week ended May 22, with $57 million into mutual funds and $46 million into ETFs.
Investors last year faced a number of high-profile financial struggles in Puerto Rico, Illinois and Detroit that spooked municipal markets, Roseen noted.
"But if you take a look overall, there have been returns more handsome than Treasury yields," he said.
Funds that hold investment-grade corporate bonds gained a net $1.6 billion, while high-yield corporate bond funds - viewed as riskier - gained a more modest $65 million.
Money market funds also saw net outflows for a second straight week, with $15.6 billion exiting. The funds, which are low-risk vehicles that invest in short-term securities, are viewed as a safe place to park cash.
The weekly Lipper fund flow data is compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds.
(Reporting by Luciana Lopez; Editing by Lisa Shumaker)