Equity ETF outflows hit US MFs: Lipper

* Bank loan funds extend inflow streak to 46 weeks.

* Muni bond outflow streak,at 27 weeks,appears waning

* Taxable bond funds pull in cash,steady pace maintained

Overall,U.S.-domiciled equity funds suffered nearly $6 billion in net outflows,with the vast majority bleeding out of domestic-focused equities.

Excluding ETFs,the traditional funds business pulled in a net $1.6 billion,with inflows for both domestic as well as non-domestic equity funds.

Equity funds are being pushed around by short-term traders,whether they are institutional or not. We have had some disappointing economic news that people are focusing on as (corporate) earnings season wraps up,said Tom Roseen,senior analyst at Lipper.

This could be a little bit of sell in May and go away. I see it as a buying opportunity rather than sitting off to the sidelines,he said.

Investors pulled money from broad-based equity ETFs. The four biggest outflows came from the iShares: Russell 2000 index fund,$1.2 billion; the State Street SPDR Dow Jones Industrial Average fund,$1.2 billion; the PowerShares QQQ Trust 1 fund,$760 million; and the State Street Industrial Select Sector SPDR,$711 million.

YIELD HUNTING

The view across the broad spectrum of equities was mixed. On top were sectors that offered chance to earn a steady stream of cash such as equity income funds,utilities,real estate and healthcare/biotechnology.

Technology shares,at least in the traditional fund sector,had outflows for a seventh straight week,at $24.6 million,versus inflows among the sector’s ETFs.

There was some trepidation in the emerging markets,at least for equities,where outflows hit $421 million on the week,breaking a 10-week inflow streak. Emerging market debt funds more than doubled inflows to $223 million from the prior period.

All taxable bond funds extended their inflow streak,pulling in $4.9 billion in fresh capital,bringing 22 weeks of inflows to a total of just under $80 billion.

For nearly a year now,investors have poured fresh cash into bank loan funds that invest,primarily,in below investment grade floating rate loans. They benefit from rising interest rates as they reset their yields on a periodic basis.

Interest in the sector,as evidenced by rising net inflows since March,was given a boost in the last reporting period by rising U.S. wholesale price data and indications some U.S. Federal Reserve officials are concerned about increasing inflation pressures.

I think this is going to have an impact on bank loan funds and could extend this rally,said Roseen.

In the latest week,bank loan funds took in $721 million in fresh cash,putting the cumulative 46 weeks of inflows at $22.4 billion.

MIXED MESSAGE ON MUNIS

Municipal bond funds outflows of $108 million,extending the outflow streak to 27 weeks for a cumulative $34.4 billion in net redemptions since mid-November.

But when traditional funds are separated from ETFs the picture is not as stark as the combined flow data might indicate.

For a second week running,muni bond ETFs registered net inflows of $36.9 million in the latest week,on top of a small inflow in the prior period. The muni bond ETFs have had sporadic bouts of inflows in the last two months but remain overwhelmed by the net redemptions within the traditional mutual fund space.

It looks like the outflows may be about to subside. We may be able to call an end to this bloodletting,said Roseen.

The weekly Lipper fund flow data is compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds.