Stock and bond funds attract cash, as pace slows
Stock mutual funds attracted new cash for the third week in a row during the period ended March 27, but at a slower pace than during the previous week. Bond funds continued to bring in new money, showing that this year's flow into stock funds is not coming at the expense of bonds.
Investors deposited a net $958 million into U.S. stock funds during the weeklong period, the Investment Company Institute said in a preliminary report Wednesday. That was down from the $1.28 billion that the funds attracted during the previous week.
Deposits into stock funds have exceeded withdrawals in 10 of 12 weeks year-to-date, reversing course from last year. Before the period ended Jan. 9, withdrawals from U.S. stock funds had exceeded deposits for 24 consecutive weeks, dating to mid-July.
Investors have been encouraged by recent data about jobs and the housing market. Those numbers, combined with mostly strong fourth-quarter earnings reports, suggest the economic recovery is accelerating. The Standard & Poor's 500 index has gained 9 percent for the year through Wednesday, and the index added 0.3 percent during the week ended March 27.
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 $2.85 billion was added, extending the streak of net deposits in that category to 12 weeks. However the latest period's total was down from $3.75 billion during the previous week.
Bond mutual funds have consistently attracted cash in recent years, a trend that has extended into 2013. Investors deposited a net $3.49 billion into bond funds during the period ended March 27, down from the $5.95 billion in the previous week, according to ICI, a fund industry trade organization.
During the latest week, a net $3.44 billion was deposited into taxable bond funds, which primarily invest in corporate bonds. Investors deposited a net $51 million in municipal bond funds, which invest in bonds issued by state and local governments.
A net $1.82 billion was deposited into hybrid funds, which invest in both stocks and bonds.
Overall, investors deposited a net $9.12 billion into long-term mutual funds of all types during the week. That was down from net deposits of $12.38 billion in the previous week.