U.S. Stock Funds Take in Net $21.4 Billion in November

Investors added a net $21.4 billion to U.S. stock mutual funds in November, the strongest pace since April, an industry trade group said Thursday.

The inflows were larger than the $7.2 billion that the stock funds took in during October, according to the Investment Company Institute.

Enthusiasm for stock funds was fanned by a stock market rally in November. The Dow industrials and the Standard & Poor’s 500 stock index each gained about 4%, and the Nasdaq composite was up more than 6%.

With the stock market continuing its advance into December, stock funds are on track to extend the string of consecutive positive monthly flows to 22. TrimTabs Investment Research, a Santa Rosa, Calif.-based fund-tracking firm, estimates that investors will add $11.1 billion to stock funds this month, based on a projection of data through Wednesday.

Carl Wittnebert, research director at TrimTabs, said the December number could go higher if a trend to stronger inflows in recent days continued.

This year’s net flows into stock funds, which reflect new sales minus redemptions and also show the effects of exchanges, have already surpassed the 2003 total of $152.3 billion. The flows for the first 11 months of 2004 total $167.4 billion, according to the ICI data, which are based on fund companies’ reports of sales activity and assets.

The ICI also reported that:

* Cash levels at stock funds were 4.6% of assets in November, up from 4.4% in October and unchanged from a year earlier.

* Stock fund managers bought a net $8.8 billion of stocks in November, compared with net sales of $1.4 billion in October.

* Bond funds took in a net $2 billion in November, smaller than October’s inflows of $3.6 billion.

* Money market funds took in a net $27.5 billion in November, compared with outflows of $14.3 billion in October.

* Assets of stock mutual funds rose by about $227.9 billion, or 5.7%, to $4.22 trillion.

* Fund assets of all types rose by $273.7 billion to $7.92 trillion.