Lipper: Equity Fund Deluge Lets Up in February

March 22, 2004 ( - Equity mutual funds enjoyed healthy inflows in February for the 12th straight month, according to the monthly Lipper fund flow report.

However, even at $30.5 billion, the asset advance was lower than the $47-billion equity inflow seen in January because of various seasonal factors and a flatter market mood among investors, Lipper said in its report.

“Mutual fund flows in the aggregate have survived the past six months of intense scandal shock quite well,” Lipper researchers wrote. “Individual brands are floating proudly or sinking depending on whether they are involved. Flow patterns are brand- rather than fund-specific.” Lipper said the flows from the 16 firms prominently involved in the ongoing abusive trading scandal were down a combined $14 billion in assets in February.

Otherwise, as has been the case in recent months, US Diversified funds enjoyed a particularly strong February with a $10.6-billion inflow, followed by $8.4 billion into world equity funds and $8.3 billion in mixed and misc. equity funds. The largest winners were international funds, advancing by $5.5 billion while international small cap funds took in almost $500 million over the month, Lipper said. Pacific region funds with a $125 million inflow gained from positive developments in India, China, Korea, and Japan. Latin America and emerging marketing funds suffered small outflows in February.

Sector funds advanced in February, but its $1.6-billion inflow trailed January’s $2.3 billion advance. Real estate funds led the way with $1.1 billion net new money.

Looking at US funds, Lipper said investors still like value over growth “despite the increasing evidence that the domestic economy is on an upward track.” Value funds first broke out of the pack in January 2001 and have edged out growth funds during 36 of the last 37 months, Lipper reported. In February, value funds walked off with a $6.1-billion advance while their growth counterparts had a modest outflow. By size, multi-cap funds led the way at 8.2% followed by mid-cap with a 3% February advance.

Lipper said fixed-income funds were flat during February with taxable funds suffering a slight loss and municipal funds enjoying a corresponding gain. Long-term bond funds suffered a $3.5-billion loss while short- and intermediate-term funds enjoyed the exact same corresponding gain.