As the stock market surged this month and the Dow Jones industrial average finally hit 10,000, net new investments into stock mutual funds have returned to normal levels, after a dismal showing in February.
Stock funds are on track to attract $22.6 billion in net new money in March, according to the Santa Rosa-based research firm Trimtabs.com.
“It’s a complete reversal of fortune from February,” said Greg Gable, a spokesman for the discount broker Charles Schwab.
Indeed, figures released Tuesday show that stock funds attracted just $757.7 million in new money in February--the second-worst month for mutual fund cash flows since January 1991.
“It’s nothing--it’s pocket change,” Carl Wittnebert, Trimtabs’ director of research, said of the February flows.
February has historically been a strong month for investments into stock funds, as tax-wary investors fund their individual retirement accounts. But investors apparently had their minds on short-term market movements, not long-term retirement savings.
Most of the major stock market indexes were down in February, with the Standard & Poor’s 500 index of blue-chip stocks losing 2.6% and the Russell 2,000 index of smaller stocks dropping nearly 8%.
The big losers in February were again funds that invest in foreign and small-company stocks.
Investors pulled a net $5.1 billion from world equity funds in February and a net $3.6 billion from aggressive growth funds, which serve as a proxy for many small-company stock funds, according to the Investment Company Institute, the fund industry’s chief trade group.
At the same time, bond funds attracted $4.4 billion in February, and ultra-safe money market funds pulled in a net $21.4 billion.
Among the fund complexes reporting strong March stock fund flows are Fidelity Investments, Vanguard Group, Schwab, Janus and Invesco. T. Rowe Price is reporting a flat month for stock funds, and Strong Funds is reporting net redemptions of $71 million.