Most Fund Categories See November Inflows

Mutual fund research firm Lipper Inc reports investors snatched up $10 billion in equity mutual funds in November, their first pick up since May’s $10.2 billion inflow.  

However, equities are set to finish 2002 with an annual net outflow, something that has not happened since 1988.   “December is typically slow seasonally for fund buying, and stocks have declined a bit since December 2nd, so it seems unlikely that the net inflow this month can make up the roughly $10-billion year-to-date shortfall,” said Lipper senior analyst Donald Cassidy.

Large-cap funds – the most widely held equity funds – saw their 23rd straight month of outflows at $2.9 billion. However, Multi-cap funds proved to be big winners, gaining $3.9 billion in November.   Meanwhile, gains were also seen in world equity funds ($1.4 billion in inflows), balanced funds ($900 million) and sector funds ($700 million), Lipper said.

Bond Barrage

Bond funds continued to see assets pour in, recording a net inflow of $7 billion.   November’s gain marked the 11 ^th consecutive month of bond-fund inflows and the 22 ^nd in the past 24 months.   Lipper says bond fund are a virtual lock to break $120 billion record for inflows set in 1986, with year-to-date inflows currently at $127 billion and only 10 trading days remaining until the end of the year.

The inflows were comprised of $4.9 billion in funds holding short and intermediate term instruments while $2.1 billion were in long bonds.

High Yield funds led all types with $3.1 billion in net inflows.

High Money

Money market funds reported stronger-than-expected inflows as well, recording $119 billion in November.  

These numbers are especially impressive when compared to the average net intake for money market funds in November, at $55 billion.

Institutional class funds’ inflow of $125 billion spurred the growth by offsetting the $6 billion in outflows seen in retail class funds.

Lipper attributed the large November inflows to a trend over the past few years among corporate treasurers who have increased their use of money funds, as deep declines in rates have made internal staffing to invest free cash directly less profitable.   This year reflects a working down of inventories and receivables following notably slowed business activity in the previous months.

Additionally, Lipper noted a seasonal tendency to build cash in anticipation of major estimated-tax payment dates in December.