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.
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