Demand for Stock Funds Still Zooming : Securities: Fund companies say December purchases are exceeding strong November results.

Americans’ net purchases of stock mutual funds in November reached their highest levels since January 1994, and December is looking even better, the industry’s trade group and major fund companies reported Thursday.

Stock funds’ net new cash inflow totaled $14.5 billion in November, up sharply from $9.2 billion in October and the best showing since the $18.4 billion of January 1994, the Washington-based Investment Company Institute said.

The heavy November inflow resulted from continued strong purchases and a drop in redemptions as the bull market on Wall Street surged anew. Net new cash flow is purchases adjusted for redemptions, reinvested dividends and exchanges among funds in the same company, and thus measures fresh cash flowing into funds.

Investors appeared to be ignoring usual warnings to avoid buying stock funds in November and December, because that is when the funds make capital gains distributions that can result in immediate tax liabilities for buyers.

Experts say investors either may not care or are buying funds mainly through tax-sheltered retirement plans that needn’t be concerned with tax issues.

In any case, stock fund demand has remained robust this month and at many fund companies is topping November figures, fund companies said.

Bloomberg Business News reported that some of the nation’s biggest fund companies, including Vanguard Group, Putnam Investments and Oppenheimer Management are reporting stronger purchases in December than in November.

Putnam said net fund purchases are up 21% this month, led by strong interest in stock funds. “It [is] one of our best months of the year, and we expect a continuance of the current trend in January,” said William Shiebler, president of Putnam Mutual Funds.

December marks the fifth straight month that new purchases of Vanguard stock funds exceeded $1 billion, said Brian Mattes, company spokesman. “At the rate cash flow is coming in, more than $70 million a day, we’ll in all likelihood pass this year’s record of $1.27 billion that was set in September,” he said.

But Fidelity Investments and T. Rowe Price Associates reported a slight slowdown in fund purchases this month.

Fidelity said new purchases of stock funds have declined to about $2.5 billion in December from about $3.3 billion in November.

While most of the cash flowing into stock funds is heading for domestic funds, investors are starting to warm up to international stock funds.

T. Rowe Price reported a “sizable” increase in purchases of its international funds this month, and Oppenheimer said its Global Stock fund was one of its top sellers.

Overall, the heavy money inflow into stock funds helped boost the average amount of idle cash that stock fund managers are holding. The ICI said the average U.S. stock fund had about 7.9% of its assets in cash at Nov. 30, up from 7.5% at the end of October.

Meanwhile, investors also are returning to bond mutual funds, though still in relatively small numbers. The ICI said net new cash flow into bond funds was $2.2 billion in November, up from $1.8 billion in October and the highest inflow since January 1994.

Assets of all mutual funds totaled $2.78 trillion at the end of November, compared with $2.70 trillion at the end of October.