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.”

Long-term funds — i.e., stock, bond, and hybrid funds — collectively had a net inflow of $14.1 billion in October, compared with a net inflow of $16.0 billion in September. For the year (through October), long-term funds have posted a net inflow of $169.1 billion.

Money market funds had a net outflow of $14.1 billion in October, compared with an outflow of $42.4 billion in September. Funds offered primarily to institutions had an outflow of $8.8 billion. Funds offered primarily to individuals had an outflow of $5.3 billion.

Overall, the combined assets of the nation’s mutual funds increased by by $87.5 billion, or 1.2%, to $7.65 trillion in October.

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

STOCK MUTUAL FUNDS

October 2004

September 2004*

YTD 2004

YTD 2003*

New Sales

67.47

67.23

773.63

690.23

Redemptions

-59.08

-56.32

-630.70

-577.67

Exchanges In

12.97

10.01

138.70

209.41

Exchanges Out

-14.18

-10.70

-135.51

-198.80

Net New Cash Flow

7.17

10.22

146.13

123.17

TAXABLE BOND MUTUAL FUNDS

October 2004

September 2004*

YTD 2004

YTD 2003*

New Sales

21.59

22.22

243.36

311.56

Redemptions

-18.65

-19.82

-235.03

-258.87

Exchanges In

3.34

2.85

38.66

68.90

Exchanges Out

-2.81

-2.52

-47.71

-80.11

Net New Cash Flow

3.47

2.74

-0.73

41.49

MUNICIPAL BOND MUTUAL FUNDS

October 2004

September 2004*

YTD 2004

YTD 2003*

New Sales

3.74

4.09

41.75

52.82

Redemptions

-3.73

-3.97

-50.80

-53.06

Exchanges In

0.55

0.60

7.38

12.91

Exchanges Out

-0.57

-0.62

-11.07

-17.26

Net New Cash Flow

0

0.09

-12.74

-4.59

HYBRID MUTUAL FUNDS

October 2004

September 2004*

YTD 2004

YTD 2003*

New Sales

8.74

9.06

94.85

75.00

Redemptions

-5.49

-6.37

-61.69

-52.85

Exchanges In

1.09

1.08

13.50

15.41

Exchanges Out

-0.89

-0.81

-10.20

-11.54

Net New Cash Flow

3.45

2.97

36.46

26.03

Amounts in $Billions *Revised

Contact Bob Keane with questions or comments at: bkeane@investmentadvisor.com.