Despite powerful rallies in stocks and bonds this month, investors have slowed their purchases of stock and bond mutual funds after a strong February, many fund companies report.
T. Rowe Price, Massachusetts Financial Services and Janus Capital, among others, all say purchases are down this month.
"People aren't convinced it's time to commit more money to funds, especially with stock prices as high as they are in the U.S.," said Gavin Quill, marketing vice president at Scudder Stevens & Clark in Boston.
The slowdown isn't universal. Putnam Funds, for one, says purchases are up in March.
But February was a better month for many companies.
The Investment Company Institute, the trade group for the funds, said Tuesday that net new cash flow into stock funds was $8.72 billion in February compared to $6.22 billion in January and $14.46 billion in February, 1994.
In the biggest surprise, bond funds saw a net cash inflow of $1.13 billion in February--their first cash gain in a year, following months of heavy redemptions as interest rates rose. As bond yields have eased again this year, some investors have grown more confident about holding on to bond fund shares, or investing more.
In January, investors had pulled a net $3.45 billion from bond funds.
Meanwhile, international stock funds also saw net cash inflows in February, after minor net redemptions in January. Net purchases were $445 million in February after an outflow of $38 million in January.
But so far in March, fund giant Fidelity Investments says, it has seen a net $300 million outflow from its international stock funds. Many investors continue to stash cash in money market funds, Fidelity says.
Some companies, however, say investors are showing modest new interest in shares of emerging-market stock funds, beaten down as many Third World stock markets have slumped.