January Saw 'Modest' Stock Fund Gains

February 17, 2009 (PLANSPONSOR.com) - Investors in U.S. stock mutual funds added modestly to their portfolios during the latest month, reversing seven straight months of net redemptions, according to Strategic Insight data.

A Strategic Insight news release said  stock fund positive flows reached $7 billion in January 2009 and were supported by seasonal deposits. Inflows were experienced in both U.S. stock funds ($5 billion) as well as in international equity funds ($2 billion).

During January, mutual fund investors net purchased $21 billion of taxable bond funds – with all key sectors showing gains – and more than $3 billion of tax-free bond funds, the news release said. Money market mutual funds benefited from more than $64 billion of net inflows, as assets rose to another record nearing $4 trillion, the company said.

“January data suggests a slowing of defensive switching among stock fund investors, and implies that sizeable net redemptions are unlikely to recur,” commented Avi Nachmany, Strategic Insight Director of Research, in the announcement . “With more than two-thirds of stock fund assets held for retirement savings, the eventual recovery of stock prices will benefit most buy-and-hold investors.”

In addition, ETF bond funds garnered over $5 billion of net inflows in January, while ETF equity funds experienced modest net redemptions.