July 29, 2004 — Investors appeared to have regained some confidence in the stock market in the month of June — equity portfolios received a net new cash inflow of $10.45 billion, after attracting only a trickle — $431 million — in the prior month, according to the Investment Company Institute.
Bond funds have somewhat slowed their hemorrhaging of cash, though they remain firmly in the red. During June, fixed-income portfolios had an outflow of $7.44 billion, compared with a $16.23 billion outflow in May. Taxable bond funds had an outflow of $4.21 billion in June compared with an outflow of $11.23 billion in May. Similarly, municipal bond funds had an outflow of $3.23 billion in June, versus an outflow of $5.00 billion in May.
In addition, hybrid funds posted a $2.36 billion net inflow in June, similar to the inflow of $2.29 billion in May.
ICI also noted that among equity funds, funds that invest overseas had an inflow of $2.76 billion in June, compared with an inflow of $1.35 billion in May. Funds that invest primarily in U.S. stocks had an inflow of $7.69 billion in June compared with an outflow of $916 million in May.
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“I am somewhat confounded by how much cash went into stock funds in June, given that the major equity indexes have recently hit year-to-date lows,” said Louis Harvey, president of Dalbar Inc., a Boston-based mutual-fund consultant. “I would have expected more modest inflows into equities, as the markets have been so sluggish. Perhaps the June inflow reflects the release of some pent-up cash.”
Year-to-date through June, equity funds have been gained net new cash flow of $118.47 billion, well ahead the $35.57 billion figure in the prior year.