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Stock Funds Soak Up Cash

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Feb. 27, 2004 — Money continued to flow into stock mutual funds last month as investors focused on rising equity prices and not the market timing scandal.

Domestic stock funds took in $31.8 billion in January after netting $27.8 billion a month earlier, Financial Research Corp. reported. Funds that invest in international stocks saw inflows increase to $13.4 billion from $10.7 billion.

The figures include investments in exchange-traded funds, which trade like stocks. Prior to this month, FRC did not include inflows into ETFs in its monthly statistics.

Bond mutual funds and ETFs netted $855 million last month after suffering outflows of about $1.4 billion in December. Corporate bond funds took in money in both months, but investors pulled money out of products that invest in government and municipal bonds in January and December.

American Funds took in $11.7 billion to lead all fund complexes in sales last month. The company’s Growth Fund of America/A (AGTHX) attracted an estimated $3.1 billion, making it the best selling fund.

American was trailed by Vanguard Group, the second-largest U.S. fund company, which took in $11.0 billion, and Fidelity Investments, the biggest domestic fund company, which saw inflows of $4.7 billion.

Among the 25 biggest fund companies tracked by FRC, Janus Capital Group (JNS) and Putnam Investments, which have suffered redemptions in recent months because of the fund trading scandal, continued to hemorrhage assets. Janus’s assets decreased by $2 billion last month, and Putnam’s slid $3.1 billion.

The second-best selling fund last month was the Dodge & Cox Stock Fund (DODGX), which took in $1.9 billion. Third place was held by Vanguard Total Stock Market Index/Inv (VTSMX), which attracted $1.3 billion.