Domestic Stock Funds Show Strong Cash Flow
Norris, Floyd, THE JOURNAL RECORD
NEW YORK _ Mutual funds that buy American stocks are continuing to attract a lot of cash from investors, although May's cash flows have been down from April's extraordinarily high levels.
In April, such funds took in a net $8.6 billion, the highest flow for domestic funds since January 1994, but the cash did not stay in the funds for long. Instead, almost all of it was invested immediately in stocks, according to figures released by the Investment Company Institute, a trade group.
The figures showed that domestic mutual stock funds had just 6.8 percent of their assets in cash at the end of April, down from 7 percent in March and the lowest since 1978.
While the money is pouring into stock funds, bond funds are breaking even, at best, in terms of money flow. In April, a net $1.4 billion was withdrawn from bond funds, with most of that coming from funds that invest in municipal bonds.
"In 1994, we had the worst bond market in history, and that is a wound that has not healed yet," said Jack Sharry, a managing director of Putnam Investments. "People have a greater comfort with equities."
At Fidelity Investments, the nation's largest mutual fund group and a unit of the FMR Corp., domestic equity funds took in about $1.3 billion this month, said spokeswoman Marilyn Morrison. That was down from $2.5 billion in April, when cash flows were inflated by the deadline for many retirement fund contributions.
April also saw a rebound in cash flow for international stock funds, which invest only outside the United States, and global stock funds, which can invest anywhere in the world. …