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Investing October 19, 2001
Institutions Join Record Equity Fund Exodus
October 19, 2001 (PLANSPONSOR.com) - Investors
pulled a record $32 billion from stock mutual funds in
September, according to preliminary data from fund tracker
Lipper. More than $6 billion of that outflow was from
institutional investors, according to the report.
Reported by Nevin E. Adams
If those estimates hold up, it would be well more than the previous record of $20.6 billion reported for March of this year by the Investment Company Institute (ICI) (see Investors Flee US Equity Funds in March ). A processing error at Lipper resulted in a $9 billion error in the preliminary calculations in February (see Lipper Miscalculates February Outflows ).
Still, to put that record in context, the September outflows are less than 1% of total stock fund assets, which stood at $3.38 trillion at the end of August (see Stock Funds Slide, Bonds Buoyed in August ). After the October 1987 crash – 14 years ago today- stock funds suffered outflows of nearly 5%.
“Out” Flows
It was the third month in a row that stock funds have been hit by net withdrawals, and the fifth month so far this year. You’d have to look back to the late 1980s to find a year with more than two months of net withdrawals from equity funds.
Overall, value stock funds experienced smaller outflows than growth funds, $2.1 billion versus $12.8 billion, according to Lipper. US diversified stock funds saw outflows of $21.5 billion, with mid-cap values the only category to enjoy a net inflow, $1.5 billion. Sector funds saw $3.2 billion slip from their fingers, while international funds saw outflows of $2.8 billion.
Money market funds were the big winner, drawing a massive $57.6 billion net inflow. In fact, a short-term focus appeared to be the order of the day, as bond fund investors moved from long-term bond funds ($2.1 billion net outflow), while short- and intermediate-term funds drew a net $9.4 billion, according to the report.
Family Matters
According to Reuters, Vanguard saw about $1.3 billion leave its stock funds, less than 0.5% of its assets. A net $1.7 billion moved into its bond funds last month, while a net $1.8 billion flowed to money market funds at the fund giant.
Roughly $5.7 billion pulled out of Fidelity’s stock funds during September, about 1% of assets, according to Reuters. Bond funds and money market funds were net gainers, with inflows of $1.1 billion and $8.5 billion, respectively.