Rate of Flows Into Stock Funds Slowing

The level of fresh investments in U.S. stock mutual funds is slowing from last year’s record pace and bond funds are attracting increasing numbers of new investors, the Investment Company Institute reported.

A net $14.58 billion went into stock funds last month, about half of last January’s record $28.9 billion and down 5.6% from December, when a net $15.45 billion was invested, the ICI said.

At the same time, the trade group said a net $11.3 billion was invested in bond funds, the highest monthly inflow since August 1993. Almost all types of bond funds attracted money in January. The exception was global bond funds, which had net outflows of almost $340 million.

Trim Tabs Financial Services Inc., which also tracks fund flows, estimates that a net $16.8 billion is being invested in stock funds this month and $4.4 billion was added to bond funds. Last February, a net $18.15 billion poured into stock funds and $1.93 billion went into bond funds.

“The amount of new money going into stock funds is quite a bit behind last year, but it’s still high,” said Carl Wittnebert, director of research at Trim Tabs.

The first six weeks of the year tend to attract the most new cash as a large number of 401(k) retirement plans are established and many U.S. fund holders reallocate their savings for the new year.

A record net $231.29 billion was invested in equity funds last year, exceeding the previous high of $221.6 billion in 1996, according to the ICI.

The industry had about $4.58 trillion in assets at the end of January, the highest level ever, the ICI reported.

The average stock fund had 5.5% of its assets in cash at the end of January, compared with 5.3% at the end of December, the ICI reported.