Big Outflows From Stock Mutual Funds in October; Lower Risk Tolerance

The ICI recently reported that in October, there was a net outflow of $126.85 billion in all long-term mutual funds, with stock funds accounting for $72.29 billion of the total. Total net assets of all funds–including money market funds–decreased 10.2% in October to $9.599 trillion from $10.686 trillion in September.

A separate ICI study released December 19 titled Retirement Savings in Wake of Financial Market Volatility (//www.ici.org/pdf/ppr_08_ret_saving.pdf) found, however, that most defined contribution plan participants continue to invest in their 401(k) plans and most are not changing their asset allocation. Based on a review of 22.5 million participant accounts over the first 10 months of 2008, the survey found that despite the steep decline in account balances, only 3% of participants stopped contributing to their plans; 3.7% took withdrawals of any kind; 15% had loans outstanding, which ICI said was well within the standard range found since 1996, and 13% had changed the asset allocation of their accounts and 9.1% had changed the allocation of their contributions, which ICI again said was well within the normal range.