Asian Woes Affecting Fund Purchases

The Asian stock market rout continues and U.S. mutual fund investors are searching for safe havens.

Investors are shifting money to less-risky, fixed-income funds at the highest rate in nearly four years. Some are moving cash to the more conservatively managed types of U.S. equity funds. Few are buying international stock funds.

“The Asian flu is prompting investors to think twice before buying an international fund,” said Charles Biderman, president of Trim Tabs Financial Services Inc. of Santa Rosa, Calif., which tracks fund flows.

The Investment Company Institute reported Thursday that an estimated net $13.5 billion was added to all types of equity funds last month, down 26% from $18.23 billion in October. The decline in stock fund investing was tied--in part--to net outflows from international funds.

By contrast, an estimated net $8 billion was invested in bond and fixed-income funds in November, the highest one-month inflows since January 1994, the mutual fund industry group reported. The bond fund inflows more than doubled the $3.7 billion that was invested in those funds during October.

Early indications are that flows to U.S. stock and bond funds in December may exceed last month’s pace, Biderman said. All bets are off, however, if Asian stock markets continue to get hammered, he said.

The tumult engulfing Asia also is weighing on U.S. stocks where concern is increasing that corporate profits may be lower next year as a result of the weak Asian economies. Already, stocks such as J.P. Morgan & Co. and Oracle Corp. have slid amid concern about Asia.