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Bond Fund Retreat Continues

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Sept. 25, 2003 — Money flowed out of bond mutual funds for the second straight month in August, according to Financial Research Corp.

Funds that invest in corporate, government and municipal bonds suffered combined outflows of about $1.1 billion last month after hemorrhaging $860 million in July, the Boston-based consulting company said. Government bond funds contracted for the third consecutive month in August.

But investors put $254 million into funds that buy high-yield, or “junk” bonds, last month, FRC said.

Domestic stock funds netted about $18.1 billion in new money last month, while those that invest in foreign companies attracted $4.4 billion.

American Funds topped all fund complexes with net inflows of $4.8 billion last month, and its Growth Fund of America/A (AGTHX) was the best selling fund, netting an estimated $1.2 billion.

Three of American’s other funds were among the five best selling funds. The second-best seller was Capital Income Builder Fund/A (CAIBX), which took in $781 million. It was followed by American Balanced Fund/A (ABALX), which attracted $750 million. Rounding out the top five was Income Fund of America/A (AMECX), which took in $722 million.

Dodge & Cox was the second-best selling complex, taking in about $1 billion. The company’s Dodge & Cox Stock Fund (DODGX) was the fourth best selling fund, attracting $737 million.

Among fund companies, Dodge & Cox was trailed by Vanguard Group, with took in $756 million; T. Rowe Price, which attracted $668 million; and Oakmark Funds, which saw inflows of $439 million.