Small Investors’ Interest in Stock Funds Remains Steady

Despite the rousing bull market in stocks this year, interest by small investors in stock mutual funds has stayed on an even keel--suggesting a relative dearth of speculation.

Stock funds’ net new cash flow totaled $8.4 billion in May, just slightly above the monthly average of $8.2 billion between January and April, according to data reported Monday by the Investment Company Institute.

Net cash flow measures fund purchases adjusted for redemptions, reinvested dividends and exchanges among funds within the same company.

So far in June, many fund companies say purchases of stock funds are running modestly above May’s levels.

Fidelity Investments says its retail and institutional clients have put a net $1.8 billion into stock funds so far this month, which means the full-month total should top the $1.9 billion net inflow in May.

Putnam Investments has seen a 2% rise in stock fund purchases compared to May.

Bond funds, meanwhile, also saw investors put more money in during May than they took out--a total of $665 million. That was only the second such inflow in the last 15 months, the ICI says.

For June, fund companies generally say they expect to report another mildly positive month for their bond funds, or small outflows.

In any case, last year’s hemorrhaging of bond funds--as investors pulled out in droves--has ceased. The plunge in market interest rates this year has repaired much of the damage done to bond fund share prices last year.

But one bond fund sector still is viewed suspiciously: tax-free municipal funds. Tax reform talk is keeping investors away from muni funds, analysts say.