U.S. Stock Fund Assets Finally Pass $2 Trillion in May
U.S. stock mutual fund assets surpassed $2 trillion for the first time last month, the Investment Company Institute said Thursday, though investor purchases of stock funds have slowed in June after a robust May.
Investors opted for conservatively managed types of funds this month amid concerns that the rally in U.S. stocks can’t go on forever, companies said.
Most of the major U.S. fund companies reported lower net inflows to stock funds in June than in May, when the industry’s equity funds attracted about $20.14 billion, the seventh-highest monthly inflow ever.
Stock funds are expected to attract an estimated $13.9 billion this month, down 30% from May, according to Trim Tabs Financial Services Inc., an investment advisory firm in Santa Rosa.
“The pace of equity inflows is lower than last month, while net inflows to our bond funds are the highest in more than a year,” said Steven Norwitz of Baltimore-based T. Rowe Price Associates Inc.
The ICI, a Washington, D.C.-based trade group for the fund industry, reported that assets for all funds total a record $3.9 trillion, with more than half in equity funds. The average stock fund had 6.1% of assets sitting idle in a cash account at the end of May, down from 6.3% at the end of April, the ICI reported.
The ICI also said bond funds attracted about $2.75 billion in May, up from $759.9 million in April.
This month, investors are buying fewer shares of aggressively managed stock funds and steering a higher percentage of new investments to so-called growth and income funds and bond funds, Norwitz said.
Fidelity said inflows to its domestic stock funds totaled about $1 billion in June, down from $1.5 billion in May. The firm’s flagship Magellan continued to suffer net outflows, though the level of withdrawals was the lowest in more than a year, the company said.
Fidelity Investments reported its top-selling fund was Fidelity Growth & Income Fund.
NU CUT Although stock fund purchases are down this month, inflows remain high on a relative basis, according to the ICI. Monthly inflows to stock funds averaged $9.9 billion in 1994 and $10.7 billion in 1995.
The monthly inflow record was set last year, when it averaged $18.5 billion, the ICI reported. This year, stock funds have attracted investments at an average monthly rate of $18.6 billion.
This month’s slowdown in equity fund flows appears to be having little effect so far on the U.S. stock market. The Dow Jones industrial average closed at an all-time high of 7,796.51 last Friday. The Dow industrials fell 35.73 points Thursday, closing at 7,654.25.
