Cash continues to surge into stock and bond funds
Investors added money to stock mutual funds for the third consecutive week, reversing course from last year when withdrawals consistently exceeded deposits. Bond funds continued to attract new cash during the period ended Jan. 23.
Investors deposited a net $3.49 billion into U.S. stock funds during the weeklong period, the Investment Company Institute said in a preliminary report Wednesday. That was down from the previous week's net deposits of $4.89 billion, and from the $7.73 billion that flowed in during the first full week of the year. The three-week total flowing into stock funds is more than $16 billion.
Before the period ended Jan. 9, withdrawals from U.S. stock funds had exceeded deposits for 24 weeks in a row, dating to mid-July.
Investors have been encouraged by mostly strong fourth-quarter earnings reports, and by the so-called "fiscal cliff" agreement reached Jan. 1 between Congress and the White House. The deal limited income tax increases to the highest earners and delayed automatic federal spending cuts. Stock rallied on the agreement, and the Standard & Poor's 500 index gained 5.3 percent for the year through Wednesday.
Investors have also been adding cash this year to funds investing primarily in foreign stocks. A net $2.86 billion was added to those funds in the latest weeklong period, down from $4.31 billion in the preceding week.
Bond mutual funds consistently attracted cash in 2012, a trend that has extended into the new year. Investors deposited a net $8.03 billion into bond funds during the period ended Jan. 23, down from $10.6 billion in the previous week. The three-week total is $28 billion.
During the latest week, a net $6.62 billion was deposited into taxable bond funds, which primarily invest in corporate bonds. Investors added $1.41 billion to municipal bond funds, which invest in bonds issued by state and local governments.
During the latest week, a net $1.94 billion was deposited into hybrid funds, which invest in both stocks and bonds.
Overall, investors deposited a net $16.32 billion into long-term mutual funds of all types during the week. That was down from net deposits of $21.92 billion in the previous week.