Cash flow into stock and bond funds continues
Stock mutual funds attracted new cash for the seventh week in a row during the period ended Feb. 20, as investors again demonstrated confidence in a market that they mostly avoided last year. Bond funds also continued to bring in new money.
Investors deposited a net $1.09 billion into U.S. stock funds during the week, the Investment Company Institute said in a preliminary report Wednesday. That was up from the previous week's net deposits of $520 million.
With deposits exceeding withdrawals for seven consecutive weeks, investors have reversed course from last year. The seven-week net deposit total is nearly $22 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. Stocks rallied on the agreement. The Standard & Poor's 500 index has gained 6.3 percent for the year through Wednesday.
Investors have also been adding cash this year to funds investing primarily in foreign stocks, and those funds attracted far more than U.S. stock funds in the latest week. A net $3.47 billion was added to those funds in the period.
Bond mutual funds consistently attracted cash in 2012, a trend that has extended into the new year. Investors deposited a net $4.71 billion into bond funds during the period ended Feb. 20, down from nearly $5.01 billion in the previous week.
During the latest week, a net $4.12 billion was deposited into taxable bond funds, which primarily invest in corporate bonds. Investors added $590 million to municipal bond funds, which invest in bonds issued by state and local governments.
A net $2.02 billion was deposited into hybrid funds, which invest in both stocks and bonds.
Overall, investors deposited a net $11.29 billion into long-term mutual funds of all types during the week. That was down from net deposits of $12.77 billion in the previous week.