Lipper: Equity Still Ruled the Fund Roost in August

According to Lipper Inc.’s monthly mutual fund flow report, the August bond outpouring was the largest in at least 20 years while the equity gain was third best in more than three years. It was the third straight month where equities carried the torch, coming on top of a $21-billion July gainer and a $19.5 billion June advance (See Lipper: Equities Carry July to Fund Inflow Valhalla ). “Stock prices had rallied on a nearly uninterrupted basis for the 5 ½ months from mid-March to the end of August and that constant positive feedback has certainly been a factor in improving flows into equity funds,” Lipper wrote in the August report.

Also losing ground during August were money market funds, chalking up a $24.7-billion retreat over the month. Leading the impressive bull charge uptown was August’s equity leader, US Diversified funds, gaining $14 billion.  Likewise, inflows were seen in:

• Mixed & Miscellaneous Equity ($6.5 billion)
• World Equity ($3.6 billion)
• S&P 500 Index ($1.1 billion).

Lipper also reported a   $2.2-billion inflow for Real Estate funds – “clearly driven by desire for income over growth prospects, “Lipper wrote.  Looking at the month performance by size, multi-cap funds were the big winners with a $6.5-billion inflow, followed by mid-cap at a $4.7-billion advance and a $3.7-billion gain.

Bond Bounce

On the other side of the fence, bond funds were decidedly more anemic in July, recording an outflow of $15.3 billion after a torrid investor two-year love affair with fixed-income. Contributing to the fall was investors move to turn off the income shower to short- and intermediate-term debt, which had August   net outflows totaling $9.1 billion.  The rug was also pulled out from under long-term bond funds, losing $6.2 billion in August .