A rebound in stock mutual fund inflows is could be the long-awaited harbinger of rejuvenated investor confidence in the market, according to Lipper.
Recent shifts into stock mutual funds potentially signal an end to lackluster sales that have plagued the industry since August 2003. Equity mutual funds in June soaked up $18 billion of fresh cash, according to Lipper, while fixed-income funds leaked $8.2 billion. The outflow in bond funds was staunched by strong performance in the high-yield sector, which tempered its hemorrhaging to $700 million in June from $4.8 billion in May. Money market funds, which bled $21.8 billion last month, were also big losers. Overall, all types of long-term funds suffered net losses of $11.2 billion during the month.
Still, the good news for equity fund is the fact that strong inflows occurred in a mix across most sectors. Only index funds remained flat. Multi-cap, or diversified equity funds, were the biggest winners, with $6.2 billion of new assets. In addition, foreign trends mirrored domestic investing habits. Nearly $3.2 billion of the $3.5 billion that investors poured into global equity investments flowed into diversified funds. This trend led Lipper researchers to conclude that although investors remain cautious, growth is strong.