Lipper: January Equity Fund Outflow First Since 1990

February 24, 2003 ( - While the size of January's $1-billlion net equity outflow wasn't itself overwhelming, the loss still represented the first time equities ended January in the negative column in more than a decade.

According to the monthly mutual fund flow report from Lipper, Inc., the last negative January was in 1990. January has tended to be an up month for equity funds with investors looking for a home for year-end bonuses, IRA contributions and other funds.

Mixed equity funds with an overall income outlook rather than growth orientation did well, attracting a   $3.1-billion inflow, while most other equity types saw money head for the exits. Domestic diversified funds were hit particularly hard with a $3.8-billion outflow. Generally Lipper said growth-oriented funds have fallen out of favor and investors increasingly opted for value funds, which gathered $1.5 billion net in January. Lipper researchers said investors generally continue with a super cautious game – opting more for income and less for growth.

International funds, which have holdings outside the US, had $1.3 billion in net inflows while global funds, which do allow US holdings, saw $500 million in outflows. Among sector funds, Financial Services and Health/Biotechnology led the outflows with about $200 million each.

Lipper said fixed-income funds continued to be the mutual fund highlight with short/intermediate term bonds particularly strong as they boasted more than $10 billion of new money. Their long-term counterparts even did well with the long bond funds pulling in $2.4 billion. Taxable bond funds gained $3.5 billion. The only blemish on the bond picture was in the muni arena where Lipper said publicity about widespread state government deficits cast a pall over the muni space. In January, Lipper reported muni funds saw $1.1 billion drain away.

Meanwhile, money market funds also got slammed with a $3.4 billion January outflow, according to the survey. This reflects a similar pattern than that seen in December with equity and money market funds taking a beating (See December Down Month For Equity, Money Market Fund Inflows ).