Mutual funds experienced net inflows of $27 billion in May, according to estimates released last week by Lipper. All three major fund categories experienced inflows. Equity funds had net flows of $10.2 billion, fixed income funds had flows of $9.8 billion and money market funds had flows of $7 billion.
"This market has been as frustrating to investors as a tire's slow leak. They keep adding money but don't see any sustained gains," said Don Cassidy, a senior research analyst at Lipper. "Still, to say that all investors are discouraged or scared is an oversimplification."
Small-cap equity funds had inflows of $4.8 billion in May, while large-caps suffered outflows by the same margin, according to Lipper. While value funds had inflows of $8.3 billion, growth funds had outflows of $3.1 billion. U.S. diversified equity funds saw inflows of $5.5 billion in May and international equity funds saw inflows of $2.6 billion, according to Lipper.
"Fund purchases are down overall, but investors are reacting to the declining dollar by investing more overseas. They are rewarding improved performance in mid-caps as well as small, and they are adding nearly as much to bond funds as stock funds," Cassidy said.
Although money market funds experienced inflows of $7 billion in May, that number is fairly weak for the category compared to previous years. March and April are typical outflow months for money market funds due to investors removing money from them to pay for taxes, but May is generally a big turnaround for money market funds. May improved on April's flows by less than $30 billion, where as that turnaround had been above $40 billion the previous three years, according to Lipper.