U.S. Stock Fund Inflows Slowing After May Surge
Investors’ appetite for stock mutual funds has waned in June after a strong May, many fund companies said Thursday.
What’s more, a growing number of investors appear to be turning to bond funds, amid concerns that the rally in U.S. stocks can’t go on forever, some companies said.
Most major U.S. fund companies said they are seeing lower net inflows to stock funds in June than in May, when the funds overall took in a net $20.1 billion, according to data released Thursday by the Investment Company Institute.
Stock funds are expected to attract an estimated $13.9 billion this month, according to Trim Tabs Financial Services, an investment advisory firm in Santa Rosa, Calif.
Denver-based Janus Funds said its stock funds have attracted $468 million this month, down from $752 million in May.
In Boston, Fidelity Investments said inflows to its domestic stock funds have totaled about $1 billion in June, down from $1.5 billion in May. The firm’s flagship Magellan continues to suffer net outflows.
“The pace of equity inflows is lower than last month,” agreed spokesman Steven Norwitz of Baltimore-based T. Rowe Price Associates Inc.
On the other hand, Norwitz said the firm’s bond fund inflows are the highest in more than a year.
“Bond sales are perking up here as well,” said Ralph Greggs, marketing vice president at New England Funds LP in Boston.
The ICI said net bond fund inflows overall in May totaled $2.75 billion, up sharply from $760 million in April. A turn to bonds would suggest that more investors are thinking conservatively and trying to hedge their bets with the stock market.
Still, some fund companies say one particular stock product--index funds, which simply track the market--aren’t much less popular.
Vanguard Group, the second-biggest fund group, said new cash continues to pour into the firm’s index stock funds. Overall, more than $2.2 billion has been invested in Vanguard’s stock funds in June, compared with $2.3 billion during all of May.
The ICI, a Washington-based trade group for the fund industry, reported that assets for all funds now total a record $3.9 trillion, with stock fund assets alone topping $2 trillion. The rest is in bond funds and money market 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 and 6.7% at the end of March, the ICI reported. That was expected, as many fund managers snapped up stocks as they began to rocket in late April and in May.
