May 2, 2005

Net New Cash Into Stock Funds Weakened in March: ICI

April 28, 2005 -- Cash flow into stock funds declined in March compared to the prior month, according to data released today by the Investment Company Institute (ICI). Equity portfolios took in about $15.0 billion in net new cash in March, versus inflows of $22.2 billion in February.

The ICI said that among stock funds, world equity funds, or funds that invest primarily overseas, had an inflow of $11.9 billion in March, versus a similar inflow of $11.9 billion in February. Funds that invest primarily in the U.S. had an inflow of $3.1 billion in March, compared with an inflow of $10.3 billion in February.

Year-to-date through the end of March, stock funds have received about $47.2 billion in net new cash, far below the $84.7 billion figure recorded in the year-ago period.

Louis Harvey, president of Dalbar Inc., a Boston-based mutual fund consultant, attributed the falling stock fund inflows primarily to the "volatile markets and declining consumer confidence."

Long-term funds -- stock, bond, and hybrid funds -- collectively had a net inflow of $18.1 billion in March, compared with net inflow of $29.2 billion in February.

Bond funds reversed course, reporting an outflow of $800 million in March, following an inflow of $2.6 billion in February. Taxable bond funds had an outflow of $505 million in March, compared with an inflow of $1.9 billion in February. Municipal bond funds had an outflow of $295 million in March, versus an inflow of $739 million in February.

"Bond funds losing money is no surprise, with the Fed's commitment to raising interest rates," Harvey said. "As long as this tightening environment persists, bond portfolios will likely continue to suffer outflows."

Money market funds had an outflow of $2.3 billion in March, compared with an outflow of $18.9 billion in February. Funds offered primarily to institutions had an outflow of $2.6 billion. Funds offered primarily to individuals had an inflow of $365.1 million.

Overall, the combined assets of the nation's mutual funds decreased by $81.3 billion, or 1.0%, to $8.046 trillion in March.

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

STOCK MUTUAL FUNDS

Amounts in Billion $

March 2005

February 2005*

YTD 2005

YTD 2004*

Net New Cash Flow

14.99

22.18

47.19

84.67

TAXABLE BOND MUTUAL FUNDS

March 2005

February 2005*

YTD 2005

YTD 2004*

Net New Cash Flow

-0.51

1.84

5.12

8.23

MUNICIPAL BOND MUTUAL FUNDS

March 2005

February 2005*

YTD 2005

YTD 2004*

Net New Cash Flow

-0.30

0.74

1.31

0.52

HYBRID MUTUAL FUNDS

March 2005

February 2005*

YTD 2005

YTD 2004*

Net New Cash Flow

3.86

4.41

13.27

15.22

*Revised.

Contact Bob Keane with questions or comments at: .

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