Funds See Net Outflows in September

October 19, 2004 ( - Equity and bond funds saw net inflows in September, while money funds experienced typical seasonal outflows for the month, according to the latest statistics from Lipper.

September brought with it net inflows into equity funds, rising from what a Lipper FundFlows Insight report calls ‘paltry’ August figures (See Lipper: Markets Still Driven by Caution ). Despite the up-and-down September stock market, investors mildly increased their inflows into bond funds, possibly taking advantage of more stable international equity markets, the analysis states. In total, a $9.2 billion inflow was seen in equity funds, with World Equity Funds seeing a $3.6 billion inflow. The S&P 500 index inflows were only $100 million, a small number that Lipper attributes to stiff competition from ETF-format products.

Bond fund flows benefited from both moderating rates and ongoing caution about stocks, Lipper reported. This is the second month in a row that the numbers have indicated a net inflow, after four months of steady net outflows. In total, $1.8 billion flowed into non-money market bond funds in September.

Money Funds experienced a typical seasonal outflow in September, but their net runoff was smaller than it was last September. New outflows for the month neared $30 billion in September, which is commonly a heavy outflow month due to tax-payment cycles and corporate operating-liquidity needs. A large amount of the outflows can be attributed to institutional needs, according to Lipper.

In total, the funds business had a net outflow of $19.3 billion for the month. Lipper is attributing the overall caution to the upcoming election, and warns that possible recounts and legal troubles could prolong the investor caution that prevails.