Lipper: March Equity Flows Continue Moderating

April 26, 2004 ( - Continuing a trend that started in February, fund investors in March cut back further on their net equity purchases, choosing instead to bulk up on shorter-term bond funds, according to Lipper, Inc.

According to a Lipper news release, e quity mutual funds saw a $23.3 billion March inflow, down significantly from February’s $30.5 billion (See  Lipper: Equity Fund Deluge Lets Up in February ).

Lipper researchers said general upset in the equity markets along with turbulent goings-on overseas led to the equity inflow weakness. “Choppy and slightly downtrending stock prices, the Spanish railway bombing, recurring bad news from Iraq and concerns over rising interest rates combined to cool equity-funds buyers’ ardor for making current purchase decisions,” senior research analyst Don Cassidy said in the announcement.

Otherwise, mixed equity funds (mainly income focused) and World Equity offerings walked off with two thirds of the March equity inflow with both taking in more than the usual dominant category, U.S. Diversified Equity funds. Mixed equity offerings enjoyed a $9 billion inflow, while world equity funds showed off a $6.8 billion advance, compared to U.S. Diversified’s $6.5 billion inflow.

Among U.S. Diversified Fund categories, multi-cap funds took the day with a $6.9 billion inflow while large-cap funds gave back $2.7 billion in outflows during March. In terms of style, value funds pulled in $5.8 billion while growth offerings lost $2.1 billion, according to Lipper.

Sector funds in total were just about a wash during the month. Health/biotechnology and science & technology offerings gave back $1 billion each while real estate funds were the big sector winners with another record net monthly inflow of almost $1.2 billion in March.

Lipper said fixed-income funds bounced back a bit in March with a $5.2 billion inflow – the highest level since June 2003. Long bonds were still not investors’ favorites versus their short-term brethren – reflecting investor concern over inflation and a potential drop in long-bond prices. Funds in the short and intermediate parts of the market saw a $5.7 billion inflow while long bonds were slightly in the minus column.