Stock Funds Again Post Net Outflow
Investors, on balance, pulled money out of U.S. stock mutual funds in August for the second month in a row, and September also looks poised for withdrawals as stocks have tumbled further, fund tracker Lipper Inc. said Monday.
Investors drained a net total of about $8 billion from stock funds last month amid broad declines in major U.S. market gauges, Lipper estimated. The August outflow was the biggest since March, when redemptions exceeded new purchases by about $20.6 billion.
Bond funds and money market funds, though, saw net purchases in August, as investors sought safety.
The August outflows from stock funds still represent only about 0.25% of total equity fund assets, Lipper said. “It was steady but not super-urgent,” Don Cassidy, senior research analyst at Lipper, said of the withdrawals.
September withdrawals from stock funds could be even bigger than August outflows, according to some estimates, as stocks have been hit hard after the Sept. 11 terrorist attacks.
Cassidy said he anticipates an outflow from stock funds in September unless stocks manage a rally for the rest of the month.
Before Monday’s market rebound, stock funds were on track to post what could be a record net outflow, in dollar terms, of about $40 billion in September, according to estimates by TrimTabs.com, a data service based in Santa Rosa, Calif.
But Monday’s gains are likely to inspire more investors to buy into funds this week, reducing September outflow estimates, said Charles Biderman, head of TrimTabs.com.
Fund investors are nursing big losses this year. The average diversified U.S. stock fund was down 25.7% year to date through Thursday, Lipper said.
World equity funds saw the biggest outflows last month, as investors withdrew a net $6.5 billion, Lipper said.
Investors sought shelter in bonds and money market funds. Bond funds took in a net $15.4 billion in August, while money market funds took in nearly $24 billion in net new money, mostly from institutional investors, Lipper said.
