Stock Funds’ Cash Inflows Off Slightly

Investors’ demand for stock mutual funds may have ebbed a bit in September, data from the funds’ chief trade group suggests.

The Investment Company Institute said Wednesday that its initial estimate of cash inflows shows that stock funds took in a net $16 billion last month, down from $17.93 billion in August.

The estimates often are revised later. For example, the ICI initially estimated that August inflows to stock funds were $19 billion.

Still, many fund companies say September was a strong month overall and that there is no sign that investors are pulling back dramatically from fund purchases.

In July, heavy redemptions of stock funds--as the stock market slumped--cut net inflows to just $5.8 billion. The inflow figure bounced back in August as the market calmed.

Stock fund inflows are watched closely because that money has become a key fuel source for Wall Street’s bull market, as individual investors buy fund shares and fund managers then put that money to work in the market.

Indeed, the rebound in August inflows has been credited with helping to drive stock prices back to record levels in recent weeks.

Despite the ICI’s September estimate, many major fund companies reiterated Wednesday that they saw higher inflows in September than August. Companies such as Vanguard Group, Charles Schwab and T. Rowe Price Associates said their inflow figures were up for the month.

The monthly inflow record for stock funds was set in January, when $28.9 billion was invested in the funds, the ICI said. Inflows then topped $20 billion each month through May, before dropping to just under $15 billion in June.

Meanwhile, the ICI estimated that bond mutual funds took in a net $1.5 billion in September. They had seen virtually no inflow in August and have experienced outflows in many months since 1994.

Fund inflows are gross purchases less redemptions and reinvested dividends. They also are adjusted for exchanges within fund families.