Equity funds experienced an outflow of $1.5 billion in July, the first net outflow since March, Lipper reported today. Conversely, money-market and other fixed income funds reported inflows, with bond funds taking in $7 billion, the largest total since January.
In March, equity funds had a record outflow of $6.8 billion, according to Lipper. However, over the next three months, equity funds took in $21.3 billion, $13.0 billion, and $16.2 billion, respectively.
World equity funds experienced the largest outflow among equity funds with net withdrawals totaling $3.2 billion, according to Lipper. The next category in terms of outflows was sector funds, which fell $1.2 billion. Other than the financial services and real estate sectors, which had small inflows, all fund sectors had net outflows in July.
Among U.S. diversified equity funds, which had total inflows of $1.5 billion, aggressive funds suffered outflows, according to Lipper. Growth-oriented funds had $3.9 billion in outflows, compared to value funds, which took in $6.1 billion. In terms of flows, large-cap funds performed the worst in both the growth and value categories.
The reason for the decline of growth and increase of value funds is that investors were looking for safer investments, according to Donald Cassidy, senior research analyst at Lipper. "Given that performance was negative across the board in July, and in fact more negative in the small- and mid-cap ranges, it appears that pursuit of value, not performance-chasing, dictated investor behavior in July," said Cassidy.
For the first time in many months, all types and maturities of bond and money-market funds had inflows, according to Lipper. Money-market funds saw inflows of $8.3 billion, while bond funds had total inflows of $7 billion, the vast majority of which came in the taxable short and intermediate term bond funds category.