May 27, 2004 — Net new cash into stock funds gained handsomely in April, rising $23.3 billion, well above the $16.0 billion they received in the prior month, according to the Investment Company Institute.

Among stock funds, the ICI said, sector funds had an outflow of $1.46 billion, compared with an inflow of $475 million in March. All other stock fund categories had inflows.

Year-to-date through April, stock funds received $108.4 billion in net new cash, versus a net inflow of $5.0 billion for the comparable period in 2003.

Long-term funds — that is, stock, bond, and hybrid funds — collectively had a net inflow of $20.14 billion in April, compared with an inflow of $28.57 billion in March.

Bond funds switched — they suffered a net outflow of $7.78 billion in April, compared with an inflow of $7.81 billion in March. Taxable bond funds had an outflow of $4.38 billion in April. Municipal bond funds had an outflow of $3.39 billion.

Money market funds had an outflow of $46.22 billion in April, compared with an outflow of $10.31 billion in March. Funds offered primarily to institutions had an outflow of $27.47 billion in April. Funds offered primarily to individuals had an outflow of $18.75 billion in April.

“These numbers come as no surprise, and they primarily reflect stockholder behavior during the end of the tax season,” said Louis Harvey, president of Dalbar Inc., a Boston-based mutual fund consultant. “The bump in April for stock portfolios can be attributed largely to tax refunds being re-invested into the equity markets, although many investors are apparently still responding to the strong returns we saw in 2003. With bond funds, investors are pulling money out in anticipation of the Federal Reserve raising interest rates.”

Overall, the combined assets of the nation’s mutual funds decreased by $153.4 billion, or 2.0%, to $7.5 trillion in April.

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

STOCK MUTUAL FUNDS Amounts in Billion $
April 2004 March 2004* YTD 2004 YTD 2003*
New Sales 87.91 90.33 365.13 246.71
Redemptions -66.29 -72.65 -266.39 -230.91
Exchanges In 17.80 15.50 69.60 84.69
Exchanges Out -16.15 -17.21 -59.89 -95.49
Net New Cash Flow 23.27 15.97 108.45 5.01
TAXABLE BOND MUTUAL FUNDS Amounts in Billion $
April 2004 March 2004* YTD 2004 YTD 2003*
New Sales 25.25 32.08 113.64 133.63
Redemptions -27.13 -24.99 -103.98 -88.73
Exchanges In 4.08 5.49 18.44 32.59
Exchanges Out -6.58 -5.02 -24.06 -25.40
Net New Cash Flow -4.38 7.56 4.05 52.09
MUNICIPAL BOND MUTUAL FUNDS Amounts in Billion $
April 2004 March 2004* YTD 2004 YTD 2003*
New Sales 4.49 5.65 20.18 21.44
Redemptions -6.65 -5.28 -21.40 -19.47
Exchanges In 0.85 0.87 3.58 5.69
Exchanges Out -2.05 -1.00 -5.17 -6.21
Net New Cash Flow -3.39 0.25 -2.81 1.45
HYBRID MUTUAL FUNDS Amounts in Billion $
April 2004 March 2004* YTD 2004 YTD 2003*
New Sales 10.89 11.69 44.62 26.88
Redemptions -6.68 -7.27 -26.88 -22.31
Exchanges In 1.44 1.61 6.80 5.46
Exchanges Out -1.02 -1.25 -4.54 -5.31
Net New Cash Flow 4.64 4.79 19.99 4.71

*Revised

Contact Robert F. Keane with questions or comments at:

bkeane@ia-mag.com.