Net Fund Inflows Lowest in Two Years

U.S. investors put a net $5.3 billion into stock and bond mutual funds in May, the smallest sum in two years, as financial markets worldwide tumbled, Financial Research Corp. said Tuesday.

The net new investment was down 83% from April, when investors put $31.3 billion into funds. Net investment is purchases minus redemptions by investors cashing out.

Stock markets began falling in early May as central banks around the world raised interest rates to contain inflation, prompting concern that economic growth would be damped and spooking investors.

U.S. stock funds had a net outflow of $4.4 billion in May, compared with a net inflow of $7 billion in April, Boston-based Financial Research said.

Foreign stock funds, which have attracted the bulk of Americans’ investment in funds over the last year, still had a net cash inflow in May. But the total of $10.1 billion was less than half the $22.2 billion net inflow in April.

Some nervous investors moved cash into money-market funds, which took in a net $38.7 billion in May, Financial Research said. The average annualized yield on taxable money-market mutual funds was 4.45% as of June 20, a five-year high, according to the Money Fund Report in Westborough, Mass.

American Funds, part of Los Angeles-based Capital Group Cos., continued to lead all fund firms in net cash inflows. Its funds took in $4.93 billion in May, Financial Research said. That was down 10% from a year earlier.

The company’s $66-billion Capital World Growth & Income Fund was the bestselling fund in May, with $1.34 billion in net inflows. American’s $142-billion Growth Fund of America, the largest U.S. mutual fund, took in $1.31 billion in May and is the bestselling fund this year, taking in $11.2 billion year to date.