Fund Inflows Slow After Hot September
Cash inflows into stock mutual funds have slowed this month to about half September’s hot pace, as the market turned rocky even before this week’s plunge, fund trackers and fund companies say.
Net inflows to stock funds will total about $12.5 billion in October, fund tracker Trim Tabs Financial Services estimated. That would be down from an inflow of $25.8 billion in September, as reported Thursday by the Investment Company Institute, the funds’ chief trade group.
September was one of the biggest months this year for net stock fund purchases. Inflows had totaled $14 billion in August, the ICI said.
This month, however, many fund companies say investors have been favoring money market funds as safe havens as the stock market has gyrated.
Boston-based Fidelity Investments, the nation’s largest fund company, said two of its three best-selling funds this month were money market funds.
But Vanguard Group, the second-biggest fund company, is bucking the industry trend. The company said more than $2.5 billion has been shoveled into its stock funds this month, up from $2 billion in September.
Industrywide, stock fund net inflows in 1997, through September, totaled $176.8 billion, down just slightly from the $179.1 billion that flowed in during the same period of 1996.
Meanwhile, many fund companies report that the stock funds experiencing the heaviest dumping by nervous investors are foreign funds--not terribly surprising, given the deep declines in Asian stock markets in recent months, triggered by the currency crisis in that region.
Fund companies including Fidelity, T. Rowe Price, Charles Schwab and Scudder, Stevens & Clark all reported net withdrawals from international funds this month. About $205 million was pulled from Fidelity’s international funds this month, representing about 1.8% of the funds’ assets, according to Alpha Equity Research Inc., which tracks the biggest U.S. fund group.
Trim Tabs estimates that a net $2.2 billion was redeemed from international equity funds this month. (See story, A1.)
More investors may be turning to bond funds as a source of stability as they exit stock funds.
Vanguard said its bond funds attracted about $530 million in new net cash inflows in October, on par with the previous month.
Bond and income funds overall in September saw an inflow of $3.6 billion, off from $7.1 billion in August. But the ICI said the August inflow included $3.4 billion in conversions of bank trust assets to mutual funds. August’s total was the largest since January 1994, when $11 billion flowed into bond funds.
The ICI revised its September bond and income fund flows down from a previously estimated $4.0 billion.
Net inflows to bond and income funds in the first nine months of 1997 totaled $24.1 billion, compared with $9.4 billion in the same period last year, the ICI said. It also said money market funds had a net outflow of $7.8 billion in September, contrasted with an inflow in August of $30.2 billion.
