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February 01, 2006 at 07:00 PM
Cash flows into the nation’s stock mutual funds slowed down in December, according to data released by the Investment Company Institute (ICI). U.S. stock funds took in $10.10 billion in net new cash for the month, versus an inflow of $21.02 billion in November.
For the year as whole, stock funds received $135.80 billion in net new cash in 2005, well below the $177.85 billion recorded last year.
U.S. investors have become enamored with foreign stock markets. World equity funds — U.S. funds that invest primarily overseas — posted an inflow of $12.28 billion in December, versus an inflow of $11.79 billion in November. Funds that invest primarily in the U.S. had an outflow of $2.18 billion in December, compared with an inflow of $9.23 billion in November. For the year, world equity funds had an inflow of $104.61 billion, versus an inflow of $31.19 billion for domestic equity funds.
Long-term funds — stock, bond, and hybrid funds — had a net inflow of $6.69 billion in December, compared with net inflow of $21.21 billion in November. For 2005, long-term funds had an inflow of $192.48 billion, versus an inflow of $209.80 billion in 2004.
In a climate of rising interest rates, investors continue to shun bond funds. Fixed-income portfolios had an outflow of $2.71 billion in December, versus an outflow of $324 million in November. Taxable bond funds had an outflow of $1.51 billion in December, compared with an inflow of $406 million in November. Municipal bond funds had an outflow of $1.21 billion in December, compared with an outflow of $730 million in November.
