Equity Funds Suffer Record Outflows in March

April 24, 2001 (PLANSPONSOR.com) - US investors reacted to a slumping stock market by pulling a record $15.4 billion out of stock mutual funds last month, according to Lipper.

That topped the previous record monthly net withdrawal set in August 1998. More ominously, it was the first back-to-back monthly net withdrawal from stock funds since August and September 1990- when Iraq’s invasion of Kuwait spooked investors- according to the mutual fund tracking firm.

March’s outflow comes on top of an outflow of $2.4 billion from stock funds in February, according to Lipper’s data.

Put In Perspective

In October 1987, the net monthly outflow from U.S.-based stock funds was around $8 billion, roughly equal to 5% of fund assets at the time. However, with $3.7 trillion now invested in US stock funds, March’s withdrawal constitutes just 0.4% of assets.

Money market funds also suffered a net outflow of roughly $4 billion, according to Lipper.

Among US equity categories,

  • Large cap funds lost $7.1 billion
  • Multicap funds lost $1.2 billion
  • Small cap funds gained $800 million

Global equity funds suffered a net outflow of $4.4 billion in March.

On the other hand, bond funds experienced their third straight month on net inflows, gaining an estimated $6.2 billion during March according to CBSMarketWatch. The consecutive monthly inflows followed 18 consecutive months of outflows.