Dow, S&P close at new records; payrolls in focus

NEW YORK (Reuters) - Investors in U.S.-based funds committed a net $3.7 billion to stock funds in the week ended June 4 after adding $2 billion to the funds the prior week, data from Thomson Reuters' Lipper service showed on Thursday.

Stock mutual funds attracted $457 million in new money, while stock exchange-traded funds drew $3.25 billion. Stock mutual funds are commonly purchased by retail investors, while stock ETFs are frequently favored by institutional investors.

Mutual fund investors were wary of domestic equities, withdrawing a net $922 million. In contrast, investors put $1.38 billion into non-domestic stock mutual funds.

Retail investors "did start to party in the international space, but they certainly ignored the domestic market," said Tom Roseen, head of research services at Lipper.

The S&P 500 .SPX rose about 1 percent in the week. The index has notched a series of record highs recently.

"Additionally what we've been seeing lately is that people aren't worried about interest rates," Roseen said.

Taxable bond funds attracted $2.8 billion in new cash, for a thirteenth straight week of inflows. Money market funds reported net outflows of $4.4 billion, for a fourth straight week of outflows.

Roseen noted recent outflows from loan participation funds, which suffered net outflows of just over $1 billion this week. That was the largest such exit of money since August 2011.

Those funds, in fact, saw a streak of net inflows from June 2012 until April this year.

The funds include short-term loans to companies that are typically not investment grade. The loan holders commonly have first claim on a company's assets in the event of bankruptcy.

Because the loans typically pay a spread over a common interest rate, the rates are adjustable.

The outflows are "just a vote of confidence that we're not going to see any immediate rises in interest rates," Roseen said. "I think people have taken their foot off the gas pedal for interest rate increases."

(Reporting by Luciana Lopez; Editing by Diane Craft and Steve Orlofsky)