Mutual Fund Inflows in July Rise Sharply

Mutual fund purchases have rebounded sharply in July after a relatively weak June, as the bull market in stocks has roared ahead, fund companies said Wednesday.

Meanwhile, the funds’ main trade group, the Investment Company Institute, reported that total industry assets as of June 30 surpassed $4 trillion for the first time, with more than half that total in stock funds.

The ICI, reporting official fund inflow data, said stock funds took in a net $16.6 billion in new cash in June, down from $20.5 billion in May. (Investor Spotlight, D9.)

Bond funds, meanwhile, took in $2.1 billion in net new cash in June, down from $2.75 billion in May.

But July has seen a surge in stock fund purchases, many major fund companies said Wednesday.

Record gains in the stock market, low inflation, strong corporate earnings and a budget deal in Washington have apparently excited investors about stock funds again, industry analysts said.

“July is proving to be an extraordinary month,” said Brian Mattes, a spokesman for Vanguard Group. “Stock funds here are showing their second strongest month this year.”

Vanguard expects net flows of nearly $4.3 billion in July into its stock funds, up from $2.2 billion in June, but shy of the record $4.9 billion in January.

Flows into international funds were also strong at Vanguard during the month, the firm said.

Boston-based Fidelity Investments, the largest mutual fund company, said it expects flows of more than $2 billion into its stock funds in July vs. $1 billion in June.

“Contrary to historic slowdowns in the summer months, investors stayed in the market,” said spokeswoman Robyn Tice.

Scudder, Stevens & Clark said July is turning out to be the company’s best on record. Investors have put $256 million into Scudder’s stock funds so far this month, surpassing the old record of $250 million in January.

As the money pours in, fund managers are aggressively putting it to work: The average stock fund had just 5.8% of assets in cash at June 30, down from 6.1% at May 31 and nearing a historic low, the ICI said.