Podcast Center
Video Center
Webcasts
Resource Center
Events
September 25, 2003 at 08:00 PM
Cash Flow Into Long-Term Funds Has Risen Dramatically This Year
By
Net new cash flow into long-term mutual funds has been dramatic so far this year, according to data from the Washington-based Investment Company Institute.
From January to July 2003, the industry reported a net positive new cash flow for long-term funds of more than $129 billion, up 35% from $95.3 billion in the same period of 2002.
[Net new cash flow is calculated from new sales plus net exchanges (investors taking money out of one fund and putting them in another), minus redemptions (investors cashing in their funds).]
Looking at equity funds alone, net new cash flow showed even more striking growth.
From January through July, stock funds reported close to $56.8 trillion in new cash, almost 100 times the $579 billion inflow they reported in the first seven months of last year. Money coming into hybrid funds almost doubled, to more than $15.5 billion from around $8.3 billion.
“Since October [2002], there has been a noted increase in the stock market,” says James Doyle, an ICI spokesman. “Due to the performance of the equity markets, assets in stock mutual funds have climbed.”
There seem to be few lingering effects on investors from the market downturn of recent memory, one analyst observes.
“Investors are performance chasers,” says Donald Cassidy, senior research analyst at Lipper Inc., Denver. “The return to equities was more pronounced than we first thought, because we thought the overhanging pain from the past three years would make them cautious. But we have had a rally of six months here, and the numbers are big.
“Time has done some healing I guess, and people dont want to miss the boat,” Cassidy says.
For bond funds, year-to-date data show that net flow is down but still on the plus side.
