Net New Cash Into Stock Funds Drops in June: ICI

Cash flow into the nation's stock mutual funds dropped by almost half in the month of June, according to data released today by the Investment Company Institute (ICI). Equity portfolios took in $6.13 billion in June, versus an inflow of $11.21 billion in May.

The ICI said among stock funds, world equity funds (funds that invest primarily overseas) posted an inflow of $4.41 billion in June, versus an inflow of $6.02 billion in May. Funds that invest primarily in the U.S. had an inflow of $1.72 billion in June, far below the $5.19 billion inflow recorded in May.

Louis Harvey, president of Dalbar Inc., a Boston-based mutual fund consultant, does not attribute the drop-off to the summer doldrums. "I think investors are looking in their rear-view mirror," he said, citing that while stock market returns were generally pretty good in June, equity performance in the first quarter of 2005 was mediocre to poor. "Advisors who sell funds have to show a track record, and returns from the first quarter were not attractive," he added.

Year-to-date through the end of June, stock funds have received about $73.45 billion in net new cash, well below the $118.12 billion figure recorded in the year-ago period.

Long-term funds -- stock, bond, and hybrid funds -- collectively had a net inflow of of $12.21 billion in June, compared with net inflow of $17.01 billion in May.

Bond funds had an inflow of $4.00 billion in June, compared with an inflow of $3.51 billion in May. Taxable bond funds had an inflow of $2.85 billion in June, compared with an inflow of $2.81 billion in May. Municipal bond funds had an inflow of $1.15 billion in June, compared with an inflow of $697 million in May.

Money-market funds had an inflow of $4.90 billion in June, compared with an inflow of $13.77 billion in May. Funds offered primarily to institutions had an inflow of $13.24 billion. Funds offered primarily to individuals had an outflow of $8.34 billion.

Overall, the combined assets of the nation's mutual funds increased by $92.6 billion, or 1.1%, to $8.216 trillion in June.

NET NEW CASH FLOW OF LONG-TERM FUNDS (BIL.$)

June 2005

May 2005*

YTD 2005

YTD 2004*

Stock Mutual Funds

6.13

11.21

73.45

118.12

Taxable Bond Mutual Funds

2.85

2.81

12.04

-11.60

Municipal Bond Mutual Funds

1.15

0.70

2.53

-11.17

Hybrid Mutual Funds

2.09

2.29

20.31

24.53

Amounts in Billion $ *Revised

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

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