Guessing where investors will put their mutual fund dollars may be like predicting the path of a pinball, given current world events, but data through February indicates that investors continue to turn to bond funds.
“You tell me with what is going on in the world today,” said Avi Nachmany, director of research with Strategic Insight, a mutual fund research firm based in New York, when asked about what sales looked like through the middle of March.
March was a very volatile month with the Dow Jones Industrial Average rising some 1,000 points mid-month only to give back much of that gain as the war continued.
The decline is consistent with the $65.8 billion decline in mutual fund assets in February that the Investment Company Institute, Washington, reported. Total assets for the mutual fund industry dropped 1% to $6.268 trillion, it said.
Bond funds had an inflow of $19.62 billion in February, while stock funds had an outflow of $11.11 billion, ICI data indicated. February figures compared with a respective $371 million outflow from stock funds and $12.98 billion inflow into bond funds in January, the ICI added.
In February, there will be $15 billion to $20 billion of expected new inflows into mutual funds with a relatively small number of redemptions given world events, Nachmany says.
Taxable bond funds experienced inflows and net gains were driven by bond funds in general, he adds. Equities experienced $3 billion to $5 billion in outflows in February, he continues.
“By and large, investors are staying the course,” both in mutual fund and 401(k) investments, Nachmany adds.
Data for February provided by Lipper, a division of Reuters, New York, indicated that bond funds had $19 billion in inflows, which Lipper said was the highest total since August 2002 and the third highest on record.