Stock Fund Inflows Decline in September

Skittish mutual fund investors sharply reduced the amount of money they put into stock funds in September, reversing August’s strong rebound, new industry data showed Friday.

Mutual Fund Trim Tabs, a private data service that tracks mutual fund money flows, calculates that net money going into stock funds slipped to $10.5 billion in September. The estimate is based on activity through Sept. 27. If the estimate holds up, September would be the low point for the year for fund flows.

The data took much of the air out of an industry report, also released Friday, that showed fund flows rising 35% in August. The latest figures from the Investment Company Institute, a trade group for the fund industry, showed net flows into stock funds in August rising to $23.43 billion from a revised $17.34 billion in July. Previously, the July figure was reported at $17.58 billion.

“August was a stellar month for performance, so it’s not surprising that inflows would back off in September,” said Carl Wittnebert, research director at Mutual Fund Trim Tabs.

It didn’t help that the market, after rising sharply in August, suffered through a rocky September. The Dow Jones industrial average, the Standard & Poor’s 500 index and the Nasdaq composite index were all down for the month. Wittnebert noted that a group of technology funds his firm tracks rose 13.5% in August, only to retreat 6.8% through the first three weeks of September.

According to the ICI’s data, $8.22 billion flowed into aggressive growth funds in August, up from $6.67 billion in July. Growth funds had net inflows of $11.43 billion, which was up from $10.37 billion in the prior month.

Stock funds investing abroad had an inflow of $3.79 billion in August, up from July’s $1.46 billion.

Assets of stock mutual funds increased by $350 billion, or 8.3%, in August to $4.594 trillion, the ICI said.

Taxable bond funds had an outflow of $1.29 billion in August, which was down from an outflow of $1.61 billion in July. Municipal bond funds had an outflow of $654.4 million in August, compared with an inflow of $881.0 million in July.

Money funds had net inflow of $22.12 billion in August, compared with an inflow of $33.35 billion in July.

On a year-to-date basis, net flows into stock funds amounted to $255.51 billion through August, more than double the pace of last year, which was $112.04 billion through the first eight months, according to the ICI figures.