Fund Assets Surpass $3 Trillion
The wealth in U.S. mutual funds topped $3 trillion for the first time in February and continued to swell in March, fund companies and the industry’s trade group said.
Still, sales of stock funds slowed as much as 40% in March from the blistering pace of January and February, some of the nation’s biggest fund companies said, including Fidelity Investments, Vanguard Group and T. Rowe Price Associates.
“While that may sound like a lot, our stock fund sales were still about $600 million in March, or double the monthly average of last year,” T. Rowe Price spokesman Steven Norwitz said.
Much of the sales slowdown is tied to a seasonal reduction in the amount of money that’s going into mutual funds from retirement plans. January and February tend to be the top sales months of the year because that’s when many companies match the distributions employees make in mutual fund retirement plans. Also, they’re usually the months when the highest number of 401(k) plans are created.
Money poured into equity mutual funds at record rates in the first two months of the year, according to the Investment Company Institute, the trade association of the mutual fund industry.
The pace of fund sales continues to accelerate. Fund assets passed the $1-trillion mark in February 1990, barreled through the $2-trillion mark 44 months later in October 1993, and accelerated past the $3-trillion mark in another 28 months.
A record $28.9 billion was invested in January and a net $21.9 billion flowed into stock funds in February, the second highest monthly amount since the ICI started tracking fund sales in the early 1960s.
Bond funds attracted $2 billion in February, down from $4.3 billion in January, the ICI reported.
The industry’s assets are up more than $1 trillion since October 1993 to $3.01 trillion at the end of February, buoyed by new fund sales and market appreciation, said John Rea, the ICI’s chief economist.
“Fund sales are bound to slow as the year goes on,” said Tim Pitts, executive vice president of New York’s Oppenheimer Funds. “Sales can’t stay this strong forever.”
April tends to be another strong sales month as investors finalize tax-planning efforts, then sales tend to tail off, Pitts said.
Investor buying wasn’t hindered in March by increased volatility in the U.S. stock market. The Dow Jones industrial average slumped 171.24 points, or 3%, to 5,470.45 on March 8--the biggest one-day drop since a 3.92% decline on Nov. 15, 1991. The index rebounded strongly, rising to a record 5,683.60 on March 18. It closed at 5,670.60 Tuesday, up $26.74.
