‘97 Stock Fund Intake a Record, but Pace Slows

The stock mutual fund industry set a record for cash inflows in 1997, but apparently won’t be doing the same this month.

Stock funds took in a record $231.3 billion in net new cash last year, 4.4% more than the previous record of $221.6 billion, set in 1996.

In December alone, stock fund inflows totaled $16.8 billion, down from $18.2 billion in November, according to the Investment Company Institute, the fund companies’ chief trade group.

But many of the companies say January is shaping up to be a far weaker month for stock fund inflows than was the case a year ago. Investors have been jittery over the market’s wild swings, the Asian economic mess and new troubles for the White House.

Industry leaders, including Fidelity Investments, Vanguard Group, Charles Schwab and T. Rowe Price, said stock fund inflows are well below levels of last January, when a record $29 billion poured in.

Schwab, for example, said $1.2 billion in net new cash has gone into stock funds this month through its fund-distribution service, versus $1.98 billion in January 1997. Fidelity, the biggest U.S. fund company, said almost $1.5 billion has flowed into its stock funds in January, versus more than $2 billion a year ago.

As investors’ appetite for stock funds has waned, they have channeled money into funds viewed as safer havens--mainly bond and money market funds.

The ICI said bond fund inflows totaled $44.7 billion in 1997, up dramatically from $12.6 billion in 1996. And bond fund inflows this month have continued to soar at many fund companies.

Schwab said more than $500 million has flowed into bond funds through its service this month, double December’s levels.

Meanwhile, Fidelity said six of its 10 best-selling funds this month have been money market funds.

Stock fund inflows since 1984, D7