Net New Cash Into Stock Funds Slows in October: ICI

Nov. 29, 2004 — Money flowed into stock funds at a slower rate in October than last month, according to data released today by the Investment Company Institute. Equity portfolios took in about $7.2 billion in net new cash in October, versus inflows of $10.2 billion in September.

Year-to-date through October, stock funds have experienced a net inflow of $146.1 billion, ahead of the $123.2 billion recorded for the year-ago period.

The ICI said that among stock funds, world equity funds posted an inflow of $4.8 billion in October, versus an inflow of $4.1 billion in September. Funds that invest primarily in the U.S. had an inflow of $2.4 billion in October, compared with an inflow of $6.1 billion in September.

Bond funds did better for the month. These portfolios had an inflow of about $3.5 billion in October, compared with an inflow of $2.8 billion in September. Taxable bond funds had an inflow of $3.5 billion in October, while new sales, redemptions and exchanges netted zero for municipal bond funds in October.

Louis Harvey, president of Dalbar Inc., a Boston-based mutual fund consulting firm, attributes most of the slowdown of cash going into equity funds as a reflection of investors’ pre-election jitters. “Many people in the investment community worried that a Kerry victory would lead to a repeal of President Bush’s tax cuts,” he said. “A typical investor probably told himself: If I get hit with more taxes on my capital gains and dividends, I should move away from equities.”