Investors Cautiously Moving Back Into Equity Funds

Published July 24, 2001, 1:00 a.m. EDT

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Funds Attract $18.4 Million in Net Flows In June

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Investors pumped more money into equity funds in June than any other month since January, a possible sign that investors are losing their fear of equity investing after a prolonged period of market volatility.

Fund flow numbers released today by Lipper show that equity funds posted $18.4 billion in positive flows in June, the highest amount since January, when equity funds attracted $33.5 billion. 'We're seeing a gradual rebuilding of cautious optimism,' said Don Cassidy, a senior analyst at Lipper. 'People are gradually getting their legs back, but they're not totally confident like they were a year and a half ago.'

Investors are demonstrating that wariness by shying away from sector funds such as those weighted in technology and telecom stocks, Cassidy said. In fact, technology and science funds posted outflows of more than $300 million, the largest outflows of any sector, he said.

While equity funds posted strong inflows, money market funds had net outflows of $25.7 billion, largely due to investors liquidating assets to pay taxes, according to Lipper. Other fixed income funds, meanwhile, posted positive flows of $5.4 billion. In addition, investors shunned growth funds, in favor of value funds. Value investments outdrew growth funds by a ratio of nearly five-to-one, attracting $7.9 billion in net flows, according to the Lipper data.