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January 31, 2003 at 07:00 PM
Jan. 30, 2003 — Stock funds suffered a net outflow of $27.1
billion in 2002, versus a net inflow of about $31.9 billion in calendar
2001, according to data released by the Investment Company Institute.
The last full year stock funds recorded net outflows was in 1998.
However, net outflows for 2002 represented only 0.9% of average assets,
while outflows in 1998 represented 8%, ICI noted.
Stock funds again reversed course at the end of the year, suffering a net
outflow of about $7.8 billion in December, after inflows of $7 billion in
November, ICI said. Bond funds, in contrast, had inflows $7.4 billion in
December, versus inflows of $7.6 billion in November.
Overall, bonds fund took in a record $140.5 billion in 2002, versus $87.7
billion in 2001. The previous record net flow into bond funds was $103
billion in 1986.
Taken in aggregate, however, inflows to stock, bond and hybrid funds were
little changed from 2001 levels, ICI noted. Flows to these long-term funds
totaled $122.1 billion in 2002, versus $129.2 billion in 2001.
Money-market funds recorded an outflow of $38.9 billion in December,
compared with an inflow of $129.9 billion in November. Funds offered
primarily to institutions had an outflow of $27.3 billion in December, while
funds offered primarily to individuals had an outflow of $11.7 billion.
I believe that 2003 will be a threshold year for the mutual fund
industry,” said Louis Harvey, president of Dalbar Inc., a Boston-based
mutual fund consultant. “Unless we start seeing overall positive returns in
the equity markets in the first quarter of this new year, we will likely see
massive outflows from equity funds.”
Harvey said his clients, mostly investment advisory firms, “have not seen
such market deterioration in their lifetimes that we’ve seen here.” He also
