Nov. 25, 2003 — Stock funds took in $25.5 billion in net new cash in October, versus $17.3 billion in September, according to data released by the Investment Company Institute. October’s inflow was the largest recorded for the year.

ICI said that long-term funds — i.e., stock, bond, and hybrid funds — collectively had a net inflow of $28.1 billion in October, up from $15.1 billion in September. October’s overall inflow was the second highest for the year, falling short of the $29.4 billion inflow in April. For first ten months of the year, the net inflow to long-term funds stood at $186.4 billion, up 75% from the same period in 2002.

ICI noted that since posting a small outflow in the first quarter of 2003, stock funds have experienced an average monthly inflow of $19.2 billion over the past seven months, and that the strength in inflows over this period coincides with rising stock prices in the U.S. and abroad. All major categories of stock funds — capital appreciation, total return, and world — have participated in the increased demand for stock funds.

Bond funds had an outflow of $1.3 billion in October, compared with an outflow of $5.9 billion in September. The October outflow came during a month in which long-term interest rates rose. The outflow is consistent with historic trends during which bond funds register outflows or weakened inflows during periods of rising interest rates, ICI noted.

Hybrid funds had an inflow of $3.9 billion in October, compared with an inflow of $3.7 billion in September.

Money-market funds had a net outflow of $23.3 billion October, down from the $50.5 billion outflow in September. The outflow in October represents a continuation of the outflows that have been evident in money market funds for the past two years, brought about by the low yields on short-term investments, ICI added.

Funds offered primarily to institutions had an inflow of $2.74 billion in October. Funds offered primarily to individuals had an outflow of $26.04 billion for the month.

Year to date through October, equity funds have received an inflow of $122.98 billion, compared with an outflow of $26.24 billion at this time last year.

Overall, the combined assets of the nation’s mutual funds increased by $202.9 billion, or 2.9%, to $7.15 trillion in October.

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

STOCK MUTUAL FUNDSAmounts in Billion $

October 2003September 2003*Year-to-Date 2003Year-to-Date 2002*

  • New Sales81.5676.09690.67771.13
  • Redemptions-60.26-61.84-578.16-753.08
  • Exchanges In18.0917.46209.66270.86
  • Exchanges Out-13.86-14.45-199.19-315.14
  • Net New Cash Flow25.5217.26122.98-26.24

TAXABLE BOND MUTUAL FUNDS

October 2003September 2003*Year-to-Date 2003Year-to-Date 2002*

  • New Sales27.1825.17311.72274.39
  • Redemptions-25.82-27.67-258.96-187.11
  • Exchanges In4.794.7168.9080.72
  • Exchanges Out-6.41-6.65-80.12-58.45
  • Net New Cash Flow-0.27-4.4441.54109.55

MUNICIPAL BOND MUTUAL FUNDS

October 2003September 2003*Year-to-Date 2003Year-to-Date 2002*

  • New Sales4.784.3552.8557.22
  • Redemptions-5.31-5.49-53.10-43.03
  • Exchanges In0.770.9612.9016.11
  • Exchanges Out-1.29-1.26-17.26-14.38
  • Net New Cash Flow-1.05-1.44-4.6115.93

HYBRID MUTUAL FUNDS

October 2003September 2003*Year-to-Date 2003Year-to-Date 2002*

  • New Sales9.148.4675.0866.66
  • Redemptions-5.83-5.30-52.50-58.61
  • Exchanges In1.671.4815.2214.43
  • Exchanges Out-1.05-0.90-11.27-15.22
  • Net New Cash Flow3.923.7426.537.25

*Revised