Equity funds had bled through outflows for four straight months including $16 billion in September. (See Bond Funds Continue to Gain, Equity Gives Back Again ).
According to Lipper’s monthly fund flow study, core style and multi-cap funds started to take the lead among domestic equity funds in October. Telecom and Science & Technology funds had small inflows after long outflow streaks.
International equity funds took in about $1 billion, while Mid-Cap Core funds also added $1 billion during the month. Large-cap funds suffered a $2.1 billion-outflow, while multi-cap funds were $2 billion in the black, Lipper reported
The key inflow generator in October in mutual funds’ total $18.5 billion gain were money market funds, which took in $9 billion during the month, Lipper said.
Fixed income funds took in $6.5 billion with a $1.4-billion outflow at the long end of the market with $7.9 billion inflow for funds in short and intermediate-term instruments, Lipper said. Over the past 10 months, bond inflows have totaled $120 billion, Lipper said.
The amount, however, was the smallest since March as a spike in interest rates in mid-October damped the enthusiasm of some investors, Lipper said.
There should be more moving into equity fund holdings, Lipper argued.
“Reason, logic, past history, and the need to build and rebuild capital all argue for investors to shift their asset allocations toward equity funds,” Lipper officials wrote in their monthly report. “But the gut overrules the brain all too often on Wall Street, especially when fear is the main driver.”