December 1, 2005

Cash Into Stock Funds Dips in October

Foreign love affair continues

Cash flows into the nation's stock mutual funds declined in October, according to data released by the Investment Company Institute (ICI). U.S. stock funds took in $6.45 billion in net new cash for the month, following an inflow of $7.92 billion in September.

But ICI's data showed that investors continue to be enamored with foreign equity markets as they move out of the U.S. World equity funds, or U.S. funds that invest primarily overseas, posted an inflow of $9.39 billion in October, versus an inflow of $9.11 billion in September. Funds that invest primarily in the U.S. had an outflow of $2.93 billion in October, compared with an outflow of $1.18 billion in September.

Year-to-date through the end of October, stock funds have received $104.86 billion in net new cash, well below the $146.16 billion figure recorded in the year-ago period.

Long-term funds -- stock, bond, and hybrid funds -- collectively had a net inflow a net inflow of $8.13 billion in October, compared with a net inflow of $13.08 billion in September.

Bond funds are attracting little interest from investors. On the whole: Fixed-income portfolios had an inflow of $746 million in October, compared with an inflow of $3.81 billion in September. Taxable bond funds had an inflow of $503 million in October, compared with an inflow of $2.80 billion in September. Municipal bond funds had an inflow of $243 million in October, compared with an inflow of $1.01 billion in September.

Money-market funds had an inflow of $21.51 billion in October, compared with an outflow of $13.38 billion in September. Funds offered primarily to institutions had an inflow of $9.17 billion. Funds offered primarily to individuals had an inflow of $12.34 billion.

Overall, the combined assets of the nation's mutual funds increased by $92.5 billion, or 1.1%, to $8.496 trillion in October.

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

October 2005

September 2005*

YTD 2005

YTD 2004*

Stock Mutual Funds

6.45

7.92

104.86

146.16

Taxable Bond Mutual Funds

0.50

2.80

27.34

-0.62

Municipal Bond Mutual Funds

0.24

1.01

6.97

-12.74

Hybrid Mutual Funds

0.93

1.35

25.68

36.58

Amounts in Billion $ *Revised

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

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