Investors pulled more money out of equity funds in September than ever before, Lipper reported today. Equity funds experienced a net outflow of $32 billion in September. The previous high was $21 billion in March of this year.
This is the third straight month of equity fund outflows, and things were heading in that direction even before the attacks of Sept. 11, according to Lipper. The streak of outflows is the longest since July through Sept. of 1990, when military action in the Persian Gulf was imminent.
"The market's closure for six calendar days, including a weekend for reflection, clearly reduced the post-attack impulse to sell," said Donald Cassidy, a senior research analyst at Lipper. "We believe that the amount of equity mutual fund and stock dumping was much smaller than it would have been had this tragedy occurred at the top of the market 18 months earlier." That is partly because investors have a "strong aversion to selling at losses," say Lipper analysts.
Despite gaining $7.3 billion in new assets, bond funds struggled as well in September, following Augusts total of $15.9 billion, Lipper reported. The inflows came in short and intermediate bond funds, which gained $9.4 billion. Long-term bond funds, meanwhile, suffered outflows of $2.1 billion.
Money market funds saw huge inflows totaling $57.6 billion last month. Normally, money market funds experience modest outflows in September. The last three years, an average of $5 billion has flowed out of money market funds in September. Both institutional and retail investors moved money into the category, according to Lipper.