Investors Leaving Money Markets, As Flows Go to Bonds, Equities

According to the latest Lipper research, investors withdrew nearly $150 billion from money market funds in March, their 14th straight month of net redemptions. They chose to pump money into both bond funds (+$36 billion) and stock and mixed-equity funds (+$27.5 billion).

Overall, bond funds experienced net inflows for the 15th consecutive month, and for the third month in a row stock and mixed-equity funds gained assets.

Meanwhile, world equity funds (+$11.2 billion) attracted large net inflows as well. In the fixed-income area, intermediate investment-grade debt funds took in $9.6 billion in March.

For the full quarter, U.S. diversified-equity funds took in $15.9 billion, and world equity funds attracted net $28.5 billion, notes Tom Roseen, research manager for the Americas at Lipper.

For the one-year period ending March 31, sector equity funds had $21.6 billion of net inflows, of which close to 60 percent or $13 billion went into commodities funds. During the first quarter, sector equity funds drew in a net $6.2 billion.

In March, for the third consecutive month, investors were net redeemers of fund assets, withdrawing some $85.9 billion from conventional funds such as money markets but excluding ETFs.

When flows of money markets and proprietary funds of funds are taken out of the fund-flow data, though, Financial Research Corporation found that stock and bond funds experienced net inflows of $70.0 billion in March.

The corporate bond objective led the net inflow category with $24.5 billion, followed by the domestic equity objective with $18.2 billion, FRC says. Pimco’s Total Return fund attracted $4 billion to lead the fund sales charts.