Mutual Funds Continue Hemorrhaging Cash In February

March 28, 2003 ( - Picking up where January left off, the combined assets of the nation's mutual funds decreased 1.0% to $6.27 trillion in February.

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.

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.