Most Mutual Fund Investors Staying Put After Stock Drop
Mutual fund investors in the last week pulled more money out of stock funds than they put in for the first time this year, but the modest amounts signal that most investors remained calm during recent market declines.
Investors withdrew only $328 million from U.S. stock funds for the week ended Wednesday, according to data from AMG Data Services in Arcata, Calif.
That’s just 0.02% of the total $1.5 trillion held in stock funds, AMG said. The investments were pulled during a week when the Dow Jones industrial average suffered its worst two-day drop since the Gulf War. The Dow rebounded on Friday, closing up 48.72 points at 6,526.07.
“It’s not that significant,” said Bob Adler, president of AMG Data, noting that most of the redemptions came from more risky “aggressive growth” types of stock funds.
What is significant, however, is a dramatic decline in the overall amount of new money flowing into stock mutual funds, noted Adler. That amount has dropped to an average $2 billion a week from the $5 billion weekly average posted in February, he said.
Still, the modest amount of stock fund redemptions for the week “shows there was a certain level of inertia” by investors, said Michael Lipper of fund tracker Lipper Analytical Services in New York. “Whether that is a correct decision or not, only history will show.”
While some of the nation’s largest mutual funds reported more phone calls from anxious investors, most funds saw no widespread selling among stock fund investors.
“We’ve had a decent week,” said Rowena Itchon, spokeswoman for T. Rowe Price & Associates in Baltimore, which had mostly positive cash inflows into its equity mutual funds, she said. The only day there was a negative outflow of money from stock funds was on Thursday, she said.
At Vanguard Group in Valley Forge, Pa., cash inflows into stock mutual funds were positive for the week ending Thursday, despite the market’s declines, said Brian Mattes, a principal at Vanguard. “There effectively has been no effect,” he said.
