Newspaper article THE JOURNAL RECORD

Mutual Funds Industry Assets Edge over $2 Trillionn Mark

Newspaper article THE JOURNAL RECORD

Mutual Funds Industry Assets Edge over $2 Trillionn Mark

Article excerpt

NEW YORK (AP) _ The mutual fund industry broke the $2 trillion barrier in assets as 1993 drew a close, propelled by a record influx of money into stock funds, according to industry figures published Thursday.

The total amount invested in the universe of 4,558 funds reached $2.01 trillion at the end of December, up from $1.98 trillion a month earlier, the Washington-based Investment Company Institute said in its monthly statistical report.

The institute said net cash flow into long-term stock and bond funds swelled to a record $31.2 billion last month, more than double November's total of $15.4 billion. The previous high of $26.9 billion was set in August.

Stock funds by themselves attracted a record $21.2 billion, compared with $9.3 billion in November. Bond and income funds, with an inflow of $10 billion, did not set a record but improved from $6.1 billion in November.

The ICI defines net cash flow as sales of new fund shares, minus shares redeemed by investors, plus net money that comes into the funds through reinvestment of dividends and exchanges from one fund to another.

December is a heavy month for distributions by the funds, and much of the proceeds is automatically reinvested in new shares. But even without the unusually large amount of payouts that were available for reinvestment last month, industry cash flow figures still showed large increases.

Analysts say the wave of new money helped to fuel a stock market advance that carried the Dow Jones average of 30 industrials and other indicators to record highs in recent weeks.

"The flood of year-end liquidity into mutual funds and other institutions from retirement fund contributions and bonus payments has prompted a feeding frenzy in the U.S. equity market," said Byron Wein, an analyst at Morgan Stanley Co., in a recent commentary.

"While investors are enjoying all this, they have not yet become euphoric. …

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