Net New Cash Into Stock Funds Dropped in December: ICI

Jan. 28, 2005 -- Cash flow into stock funds was cut roughly in half in December compared to the prior month, according to data released today by the Investment Company Institute. Equity portfolios took in about $10.0 billion in net new cash in December, versus inflows of $21.4 billion in November.

For the full year, stock funds have experienced a net inflow of $177.5 billion, well ahead of the $152.3 billion recorded in 2003. ICI noted that the 2004 figure represented the largest annual inflow since 2000 when stock funds received $309 billion.

"I would attribute the decline in stock fund inflows in December to seasonal factors, particularly tax-loss selling by investors," said Louis Harvey, president of Dalbar Inc, a Boston-based mutual fund consultant.

The ICI said that among stock funds, world equity funds posted an inflow of $7.9 billion in December, versus an inflow of $8.5 billion in November. Funds that invest primarily in the U.S. had an inflow of $2.1 billion in December, compared with an inflow of $12.9 billion in November.

Bond funds had an inflow of $1.1 billion in December, compared with an inflow of $2.0 billion in November. Taxable bond funds had an inflow of $2.1 billion in December, while municipal bond funds had an outflow of $932 million in December.

As a reflection of investors concerns about rising interest rates, cash flow into taxable bond funds plunged from $38.1 billion in 2003 to just $3.4 billion in 2004.

Long-term funds -- i.e., stock, bond, and hybrid funds -- collectively had a net inflow of $13.1 billion in December, compared with net inflow of $27.6 billion in November. For the full year, long-term funds posted a net inflow of $209.8 billion, compared with a net inflow of $215.8 billion in 2003.

Money market funds had outflow of $8.9 billion in December, compared with an inflow of $26.5 billion in November. Funds offered primarily to institutions had an outflow of $1.4 billion. Funds offered primarily to individuals had an outflow of $7.6 billion.

Overall, the combined assets of the nation's mutual funds increased by $177.5 billion, or 2.2%, to $8.1 trillion in December.

Net New Cash Flow of Long-Term Funds (Bil.$)

STOCK MUTUAL FUNDS

December 2004

November 2004*

YTD 2004

YTD 2003*

New Sales

96.96

83.59

953.93

847.67

Redemptions

-86.53

-64.27

-781.32

-710.64

Exchanges In

15.97

17.03

171.54

238.75

Exchanges Out

-16.37

-14.94

-166.64

-223.50

Net New Cash Flow

10.02

21.41

177.51

152.28

TAXABLE BOND MUTUAL FUNDS

December 2004

November 2004*

YTD 2004

YTD 2003*

New Sales

27.77

24.08

295.22

360.29

Redemptions

-25.14

-22.26

-282.34

-307.92

Exchanges In

3.53

3.88

46.06

76.33

Exchanges Out

-4.11

-3.70

-55.52

-90.65

Net New Cash Flow

2.05

2.01

3.41

38.06

MUNICIPAL BOND MUTUAL FUNDS

December 2004

November 2004*

YTD 2004

YTD 2003*

New Sales

4.59

4.24

50.57

61.87

Redemptions

-5.12

-4.06

-59.98

-64.02

Exchanges In

0.86

0.01

8.89

14.51

Exchanges Out

-1.27

-0.83

-13.16

-19.44

Net New Cash Flow

-0.9

0

-13.68

-7.08

HYBRID MUTUAL FUNDS

December 2004

November 2004*

YTD 2004

YTD 2003*

New Sales

11.27

10.16

116.30

93.16

Redemptions

-9.51

-6.31

-77.054

-65.33

Exchanges In

1.48

1.38

16.36

18.33

Exchanges Out

-1.29

-1.07

-12.57

-13.58

Net New Cash Flow

1.94

4.15

42.56

32.58

* Revised

Contact Bob Keane with questions or comments at: bkeane@investmentadvisor.com.

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