While equity and fixed income mutual funds attracted new capital over the month, the inflow failed to offset the steady stream of assets exiting low-yielding money market funds over the month.
According to Lipper estimates:
- bond funds took in $7.6 billion in new money, slightly more than they did in March
- stock funds took in $14.9 billion, half the amount that flowed in the previous month
- balanced funds saw a $2.4 billion inflow, on par with the previous month
- money market funds saw outflows of over $25 billion.
Among equity funds, sector funds, which attract more aggressive investors, suffered a net outflow of about $1.4 billion over the month, as risk appetite decreased.
In April, within the sectors:
- Science & Technology funds, which posted losses of 12% over the month, had over $1.3 billion in estimated outflows
- Utility funds, negatively affected by their exposure to telephone holdings, saw about $300 million stream out
- Telecommunications funds lost 2.5% of their assets, or around $100 million
- Real Estate funds, which pay high dividend yields and have performed well in recent months due to their reputation as a safe haven, attracted $500 million – over 3% of assets.
- Gold funds, supported by a strong gold price and negative news flow added $150 million or over 5% of assets.
US Diversified Equity funds, which are often included among 401(k) plan options as diversification strategies, saw a $10.5 billion inflow, which although large, was down almost 50% on the previous month’s inflow.
Within this area:
- value funds drew in $12.4 billion
- growth funds lost $5.3 billion.
In terms of size:
- large-cap funds saw outflows of $5.1 billion
- small-caps added a net $7.5 billion.
Lipper data showed the prevailing recent pattern in fixed income continuing, with investors favoring short- and intermediate-term funds over longer-term types, as relative principal risk for the relative yields seemed more attractive in the current interest rate environment.
- long-term bond funds saw inflows of $0.9 billion
- short- and intermediate-term bonds funds attracted $6.7 billion
Bond-fund flows continue to benefit from caution about stocks and the rediscovered virtue of asset allocation as a risk-control measure, according to Lipper’s analysis.
As usual, the tax calendar made April an outflow month
for money market funds, with some $16.5 billion leaving
taxable money funds and another $10 billion in net
withdrawals occurring in tax-free money funds.