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Cash Fled Equity Funds in June: ICI

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July 29, 2002 — Cash is leaving equity funds in droves in the wake of huge declines in the stock markets, according to the latest data compiled by the Investment Company Institute (ICI).

In June, equity mutual funds suffered an outflow of about $18.05 billion, versus an inflow of about $4.88 billion in May. ICI said that June’s losses were the third largest hemorrhage of cash in dollar terms from stock funds since the firm has been keeping records. The all-time biggest monthly drop was recorded in September 2001, when nearly $30 billion in cash flew out of equity portfolios following the terrorist attacks of September 11.

ICI noted, however, that the $18.05 billion lost last month represented only about 0.54% of total mutual fund assets in the U.S. Overall, the combined assets of the nation’s mutual funds across all asset categories declined 4.2% from $6.92 trillion to $6.63 trillion in June.

Domestic equity funds shed $18.70 billion in June, versus an inflow of $2.77 in May. Stock funds that invest overseas actually got richer in June, gaining $658 million. That was still far lower than their inflow total of $2.1 billion in May, however.

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Not surprisingly, bond funds gathered strength, receiving inflows of $12.23 billion in June, topping the $10.60 billion in inflows from the prior month.

The ICI added that money-market funds were hit hard in June with outflows of $43.44 billion, versus an outflow of $4.30 billion in May. Of that June outflow, funds that are offered primarily to institutions had outflows of $42.07 billion. Funds that are offered primarily to individuals had outflows of $1.37 billion.

All in all, ICI noted that year-to-date through the end of June stock funds are still ahead of last year’s pace, having received net new cash flow of about $53.97 billion, versus an inflow of about $49.30 billion for the comparable period in 2001.