Stock Fund Selling Slowed in October: ICI

Nov. 27, 2002 — Investors continued sell out of stock funds in October, though the pace has been cut by more than half from the prior month, according to data released by the Investment Company Institute.

Stock funds had net outflows of $7.7 billion in October, compared to net withdrawals $16.1 billion in September. Domestic equity funds accounted for $7.5 billion of October’s net outflow, versus $14.5 billion in September, while international stock funds had a net outflow of only $225 million in October, compared to $1.6 billion in the prior month.

Year-to-date through the end of October, equity funds have lost a net $26.5 billion, versus net inflows of $14 billion for the same period a year ago. Liquid assets of stock funds, as a percentage of total net assets, held at 5.1% in October, the same as in September.

Net new money continued to flow into bond funds in October, albeit at a lower rate than in September, as the stock market rallied in the second half of the month. Fixed-income funds took in a net $6.3 billion in October, versus a more hefty $15.4 billion in September.

Year-to-date through the end of October, bond funds — both taxable and tax-free — have received $125.6 billion in net new cash, far ahead of last year’s figure of about $82.8 billion.

Money-market funds performed an about-face in October, recording a net inflow of $11.2 billion, versus an outflow of $61.9 billion in September. Of that October inflow, funds that are offered primarily to institutions had an inflow of $14.1 billion, while funds provided primarily to individuals suffered an outflow of $2.9 billion.

Overall, the combined assets of the nation’s mutual funds increased by $174.1 billion to $6.23 trillion in October.

Net New Cash Flow of Long-Trm Fnds (B$) STOCK MUT FNDSAmts in B$ Oct ’02Sept ’02*YTD ’02YTD 2001*

New Sales74.9753.89771.60795.71

Redemptions-77.51-63.16-753.73-749.29

Net Exchanges-5.16-6.82-44.40-32.44

Net New Cash Flow-7.71-16.10-26.5313.97

TAXABLE BOND MUTUAL FUNDS Oct 2002Sept 2002*YTD 2002YTD 2001*

New Sales32.4229.05274.44197.64