Investor Fervor for Foreign Funds Eases

Individual investors continued to pour money into stock mutual funds in February, but their appetite for foreign funds waned somewhat.

Stock funds overall took in $27.3 billion in net new cash in February, down from $31.6 billion in January but up from $22.2 billion in February 2005, the Investment Company Institute said Thursday.

Foreign stock funds took in a net $19 billion for the month, down from a record $23.5 billion in January.

Domestic stock funds took in $8.4 billion last month, up from $8 billion in January.

Over the last year, cash inflows to foreign stock funds have far exceeded inflows to domestic funds. U.S. investors in part have been responding to the strong performance of many overseas markets, particularly those of emerging economies.

But some Wall Street pros have warned in recent months that some foreign markets might be vulnerable to a pullback after soaring over the last 12 months.

Bond mutual funds took in net new cash of $8.7 billion last month, up from $8.3 billion in January. Investors pumped more into bond funds despite rising market interest rates, which depress fund share prices.

Net new cash investment for funds is purchases minus redemptions by investors pulling money out.