Investing March 28, 2003

Mutual Funds Continue Hemorrhaging Cash In February

March 28, 2003 (PLANSPONSOR.com) - Picking up where January left off, the combined assets of the nation's mutual funds decreased 1.0% to $6.27 trillion in February.
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The gaining and declining mutual fund categories were split down the middle in February, with three up and three down.   Assets in stock funds again led the exodus, losing 2.3% to $2.57 trillion, according to a survey of the mutual fund industry conducted by the Investment Company Institute (ICI).

Stock funds’ outflow of $11.11 billion in February marked a significant turn for the worse compared to January’s revised outflow total of $371 million (See January Starts Year With Fund Outflow ).   The percentage of total liquid assets in stock funds also continued to decline, down to 4.3% in February from 4.5% in January.   Comparatively, February 2002 posted 5.3% of liquid assets in stock mutual funds.

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The other asset losses in February were posted by taxable money market and hybrid funds, which dropped 2.0% to $1.9 billion and 0.5% to$ 323.2 million, respectively.

Money market funds had an outflow of $39.60 billion in February, compared with January’s $1.23 billion. Funds offered primarily to institutions had an outflow of $39.8 billion in February. Funds offered primarily to individuals had an inflow of $170 million for the month.

However, three categories were able to beat the slide, posting net asset gains for the month. Taxable bond funds gained an impressive 3.4% to $838.8 million and municipal bond funds swelled 1.7% to $332.2 million.   The other winner was tax-free money market funds, gaining 1.0% to $285.2 million.

Bond funds had an inflow of $198.6 billion in February, as the category continued to build on January’s inflow of $12.9 billion.

Fund Tabulation

Overall, the total number of mutual funds again showed very little gain, up to 8,260 from a revised January total of 8,257.  The movement was fairly even, with only a gain of three funds recorded by taxable bond funds and two funds being tacked onto hybrid’s rolls.

Two categories showed fewer funds in January.   Both taxable and tax-free money market funds gave back one from their ranks, moving from 771 to 770 and 678 to 677, respectively.

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