Net cash flows into stock mutual funds set an all-time record in January, but net assets declined, according to the Investment Company Institute, the industry association based in Washington, D.C.
After discounting redemptions and net exchanges for the month, the ICI reported that new sales of stock mutual bonds were $39.98 billion, a 60 percent increase over net new sales for the previous month of $24.98 billion and a 132 percent jump over net new sales in January 1999 of $17.24 billion.
Seasonal factors played a role in the acceleration of net cash flows into stock funds, ICI said in a statement.
"January cash flows typically are bolstered by IRA contributions for the new year, investment of year-end bonuses and 401(k) plan investments," the ICI said.
But those factors could not account for all the record cash flows.
"Even without those seasonal factors, this would have been a strong month for the stock funds," said Chris Wloszczyna, a spokesperson for the ICI.
January's inflow of new money into the stock funds represented about one percent of all assets in those funds, the ICI said.
Net cash flows for some asset type also increased on a month-to-month basis, the ICI said. Aggressive growth, growth, and sector funds escalated more than 51 percent from $26.87 billion in December to $40.48 billion in January. Funds investing in the stocks of foreign companies gained more than 58 percent, from $7.63 billion in December to $12.03 billion in January.
But cash continued to flow out of growth and income and income-equity funds, which had outflows of $9.52 billion in December and $12.53 billion in January.
Month-to-month net cash flows increased into money market mutual funds, although cash flows declined compared to January 1999. From December to January, net cash flows into money market accounts increased more than 57 percent from $26.51 billion to $41.71 billion, but they declined more than 31 percent from January 1999, when they were $60.71 billion.
While net cash flows into stock and money market funds rose, they slipped for hybrid, taxable bond and municipal bond funds, the ICI said. Hybrid funds saw a net outflow of $6.62 billion during January compared to an outflow of $4.44 billion in the previous month and an inflow of $611.6 million in January 1999.
Taxable bond funds experienced a net outflow of $8.61 billion in January compared to an outflow of $6.26 billion in December 1999 and an inflow of $6.32 billion in January 1999.
Although the numbers improved for municipal bond funds in January, cash continued to leave them. Outflows for the month were $4.03 billion compared to $7.24 billion in December 1999 and an inflow of $2.04 billion in January 1999.
Meanwhile, net assets for all mutual funds dropped sharply in January compared to December 1999, but still were higher than those in January 1999. Total assets for all types of funds for January dropped more than one percent from December, from $6.85 billion to $6.77 billion, but were above those in January 1999, having increased more than 19 percent from $5.71 billion.
Assets in all fund types fell except for in tax-free and taxable money market accounts. Net assets in tax-free money market funds increased 3.9 percent from $204.4 million in December 1999 to $212.5 million in January and increased more than six percent over January 1999, when there were $199 million in net assets
Meanwhile, net assets in taxable money market funds grew 2.8 percent month-to-month from $1.41 billion to $1.45 billion and 18.8 percent over January 1999 when they were $1.22 billion.
Month-to-month net assets for stock funds fell 2.3 percent from $4.04 billion in December to $3.95 billion in January, but increased more than 28 percent over January 1999 when net assets were $3.08 billion.
Net assets for hybrid funds slumped 4.1 percent from $383.2 million in December to $367.6 million in January but were down less than one percent from January 1999 when they were $369.9 million.
Taxable bond fund net assets fell 1.8 percent from $536.5 million in December to $526.7 million in January and 2.9 percent from January 1999 when they were $542.3 billion.
Month-to-month net assets for municipal bond funds were down 2.2 percent from $271.6 million to $265.7 million and 12.3 percent from January 1999 when they were $303 million.