January Starts Year With Fund Outflow

February 28, 2003 (PLANSPONSOR.com) - The combined assets of the nation's mutual funds decreased 0.9% to $6.33 trillion in January.

Four out of the six mutual fund categories showed a move toward the exits in January. Assets in stock funds led the exodus, losing 2.6% to $2.6 trillion, according to a survey of the mutual fund industry conducted by the Investment Company Institute’s (ICI).

Stock funds’ outflow of $466 million in January, was a tremendous improvement compared with a revised outflow total of $8.3 billion in December (See  Two Months of Equity Fund Gains End with $7.7B Outflow: ICI ).   The percentage of total liquid assets in stock funds also continued to decline, down to 4.4% in January from 4.6% in December 2002.   Comparatively, January 2002 posted 5.4% of liquid assets in stock mutual funds.

Also posting asset losses in January, albeit to a lesser extent, were hybrid funds, which dropped 0.9% to $324.4 million. Municipal funds were down 0.6% to $326.7 billion and taxable money market funds were off 0.3% to $2 trillion

Money market funds had an outflow of $1.4 billion in January, compared with an outflow of $38.83 billion in December. Funds offered primarily to institutions had an outflow of $5.4 billion in January. Funds offered primarily to individuals had an inflow of $3.9 billion for the month.

However, two categories were able to beat the slide, posting net asset gains for the month.   Tax-free money market funds gained 2.8% to $282.5 billion and taxable bond funds swelled 1.9% to $811.5 billion.  Bond funds had an inflow of $12.6 billion in January, compared with an inflow of $7.29 billion in December.

By The Numbers

Overall, the total number of mutual funds showed a little gain to start the new year, up to 8,260 from a revised December total of 8,256.   The movement was fairly even, with only a net gain of three funds recorded by hybrid and taxable bond funds.   Other gains were posted by municipal bond funds netting two new funds and tax-free money market funds with one new member.  

Two categories showed fewer funds in January.    Stock funds lost four from 4,756 to 4,752 and taxable money market funds ended January with one less fund among its ranks.