Money Pours into Mutual Funds Investors Are Lured by Prospect of Better Yields Than CDs and by Bank Marketing Efforts

By Guy Halverson, writer of The Christian Science Monitor | The Christian Science Monitor, May 7, 1992 | Go to article overview
Save to active project

Money Pours into Mutual Funds Investors Are Lured by Prospect of Better Yields Than CDs and by Bank Marketing Efforts


Guy Halverson, writer of The Christian Science Monitor, The Christian Science Monitor


CORPORATE managers may be fretting about whether the economy gears up sufficiently to produce solid earnings growth during the months ahead. And Wall Street brokerage houses may be warily watching Japan's depressed Nikkei stock index, and any possible negative impact on United States financial markets.

But one sector of the US financial community seems to be actually enjoying - and profiting from - the current economic setting: the nation's mutual fund industry. It has seen money pour into its coffers.

Since December of last year, more than $7 billion per month in new money has flown into equity funds alone, says Heiko Thieme, who manages the American Heritage Fund.

Mutual fund inflows are "substantial and should continue" during the period ahead, says W. Christopher Maxwell, president of Vista Capital Management Group Inc.

Meantime, long-term bond funds are posting impressive sales, as hundreds of banks around the US encourage customers to switch from low-yielding bank certificates of deposit to mutual funds offered or even managed by the banks.

During the first quarter of 1992, net sales of all mutual funds (sales less redemptions) reached $51.2 billion, up from $17.5 billion for the first quarter of 1991. Assets of all mutual funds reached $1.4 trillion in March, up from $1.2 trillion a year earlier.

Moreover, the number of mutual funds continues to proliferate. Many are formed by established families of funds.

But new funds not linked to existing families of funds are also appearing as fast as investment groups can obtain regulatory permission, says John Collins, an official of the Investment Company Institute, a mutual fund trade group in Washington.

There are now more than 3,400 mutual funds, of which 2,600 are long-term bond and stock funds. Just a few years ago, in the mid-1980s, there were only about 1,500 mutual funds, of which about 1,000 were long-term bond and equity funds.

Experts here attribute the rush to mutual funds to three factors:

* Given the current low-growth economic climate, mutual funds can provide steady and high rates of return over time, compared to low yields on current CDs and other alternative investments such as real estate, coins, or other collectibles.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Money Pours into Mutual Funds Investors Are Lured by Prospect of Better Yields Than CDs and by Bank Marketing Efforts
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?