Investors in February overcame inflation worries and uncertainty about events in the Middle East, and showed their optimism by adding about $29 billion in net new cash to U.S. stock and bond mutual funds, Strategic Insight (SI) reported Thursday.
The net inflows built on similar gains in January. An estimated $15 billion in net new cash went into US equity funds in February 2011, which was down from the $21 billion in equity fund inflows in January. The equity and bond fund gains were in open-end and closed-end mutual funds, excluding exchange traded funds (ETFs) and funds underlying variable annuities, according to SI, a New York-based information provider.
“The demand for global diversification among U.S. investors remains a long-term, secular theme. Yet rising geopolitical tensions and stock price declines have slowed capital flows to emerging markets in recent weeks,” said Avi Nachmany, SI’s director of research, in a release. “Escalating food prices, $100+ oil and rising interest rates might continue to weight down investments in selected emerging wealth regions in the months ahead.”
Flows into international and global equity funds dropped to roughly $6 billion in February from $12 billion in January, “a relatively positive sign given that February was marked by the tumultuous end of Egyptian President Hosni Mubarak’s reign on Feb. 11 and the start of a mass uprising in Libya on Feb. 17,” SI said in a news release reporting February’s numbers.
Demand for U.S. equity funds continued to rebound in 2011, drawing net inflows of nearly $15 billion in February, pushing their total to $35 billion in net inflows in the first two months of 2011, SI said. “That was the best start to a year since January-February of 2007, when U.S. investors put a total of $25 billion into domestic stock funds.”