Mutual Funds Post $2B Net Outflow in June

July 14, 2011 ( - Uncertainty over the economy and unemployment increased in June, sparking U.S. mutual fund investors to net redeem an estimated $2 billion in cash out of U.S. stock and bond mutual funds in June 2011.

June marked the first month of net outflows from long-term funds since December (when investors net redeemed $16 billion from stock and bond funds), according to Strategic Insight, an Asset International company.  

June’s net outflows came amid difficult market conditions. The S&P 500 Index lost 1.7% during the month and the MSCI EAFE Index dropped 1.2%, as investors fretted about slowing jobs growth, the U.S. deficit and European sovereign debt. Investor confidence dropped, resulting in net outflows of $17 billion for U.S. equity funds. International/global equity funds saw net inflows of more than $2 billion, a drop from May’s $6.6 billion.    

In June, taxable bond funds took in net flows of $12 billion as investors continued to seek income and less-risky means of participating in financial markets. As worries over municipal defaults eased, tax-free bond funds drew nearly $1 billion in net inflows in June – their first month of net inflows since taking in net $1.7 billion in October.  

SI data shows that in total, the second quarter of 2011 saw $50 billion in net new flows go to U.S. stock and bond mutual funds. That was down from the $87 billion in net new flows to long-term funds experienced in Q1 of 2011. In the second quarter, U.S. stock funds saw net outflows of $14 billion and international equity funds saw net inflows of nearly $16 billion. Taxable bond funds drew $51 billion in net inflows and tax-free bond funds saw net outflows of $3 billion in the second quarter.   

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