Stock Funds Bled in February; Bonds Got Stronger:

March 27, 2003 — Stock funds lost $11.1 billion in cash in February, following a mild net outflow of $371 million during the prior month, according to data released today by the Investment Company Institute.

Bond funds — both taxable and munis — continued to attract investor interest with inflows of $19.6 billion in February, compared with inflows of $13 billion in January. While flows into bond funds have been flourishing month after month, stock funds have continued to record withdrawals.

Money-market funds had an outflow of $39.6 billion in February, compared with an outflow of $1.2 billion in January. Funds offered primarily to institutions had an outflow of $39.8 billion in February. Funds offered primarily to individuals had an inflow of $170 billion for the month.

“The magnitude of this net outflow from equity funds is quite surprising, given that the first few months of the year is when many investors start to put money into the stock market, particularly with respect to their 401(k) plans,” said Rosanne Pane, mutual fund strategist with Standard & Poor’s. “However, I think this shows how concerned investors were with the economy, the stock market, and the threat of war in Iraq.”

Overall, the combined assets of the nation’s mutual funds decreased by $65.8 billion, or 1.0%, to $6.3 trillion in February.

Net New Cash Flow of Long-Term Funds (Bil.$)