Stock-Fund Buys Running at High Rate

Investors are buying U.S. equity mutual funds at an above-average rate that’s on par with September figures, when an estimated $21.5 billion went into stock funds, investment companies reported Thursday.

The bulk of the net new cash investments in October is flowing into conservatively managed U.S. stock funds, such as growth and income funds, though so-called aggressive-growth funds are gaining in popularity as performance improves, the companies said. The level of new cash going to international stock funds has slowed considerably.

Bond funds are attracting almost no new money as investors withdraw cash from municipal-bond and government-bond funds. Junk bond funds, however, are attracting net new investments at a monthly rate of $3 billion, according to Trim Tabs Financial Services Inc., which tracks industry money flows.

The industry trade group Investment Company Institute reported that a net $4 billion went into bond funds in September, down from $7.28 billion in August. The August inflows were boosted by the conversion of bank trust assets to mutual funds.

“When it comes to mutual funds, people continue to put nearly all their net new savings in equity funds,” said Gavin Quill, marketing vice president at Scudder, Stevens & Clark Inc. in Boston. The average monthly inflow to stock funds was an estimated $19.15 billion in the first nine months of this year, while the average monthly inflow to bond funds was about $2.74 billion in the same period, according to the ICI.