Trends in Mutual Fund Investing
February 2001

Washington, DC, March 29, 2001 - The combined assets of the nation's mutual funds decreased by 4.7 percent to $6.897 trillion in February, according to the Investment Company Institute's official survey of the mutual fund industry. In the survey, mutual fund companies report actual assets, sales and redemptions to the ICI.

Here is how the assets of the six major fund categories changed in the past month:

Table 1.
Net assets of mutual funds
(billions of dollars)

	Feb 01	Jan 01	% chg	Dec 00
Stock Funds	3,689.8	4,093.3R	-9.9	3,962.3
Hybrid Funds	346.5	356.9R	-2.9	349.7
Taxable Bond Funds	558.6	549.7R	1.6	530.1
Municipal Bond Funds	283.0	280.3R	1.0	277.9
Taxable Money Market Funds	1,771.4	1,715.5R	3.3	1,607.2
Tax-Free Money Market Funds	248.1	240.0R	3.4	238.1
Total	6,897.4	7,235.7R	-4.7	6,965.2

R=revised data

Assets: Assets of stock funds declined by $403.5 billion in February, largely reflecting the decline in stock prices during the month. The net outflow from stock funds was $3.07 billion last month, compared with an inflow of $25.06 billion in January.

Assets of money market mutual funds increased by $64.00 billion to $2.020 trillion in February. Money market funds that are offered primarily to individuals reported cash flow of $21.62 billion during the month, compared with $20.32 billion in January.

Table 2.
Net new cash flow of long-term funds
(millions of dollars)

	Feb 2001	Jan 2001	YTD 2001	YTD 2000
New Sales	80,708	115,739R	196,447	269,378R
Redemptions	-77,457	-91,819R	-169,276	-186,147R
Net Exchanges	-6,324	1,145R	-5,179	16,927R
Net New Cash Flow	-3,073	25,064R	21,992	100,158R

Hybrid Mutual Funds

	Feb 2001	Jan 2001	YTD 2001	YTD 2000
New Sales	5,147	7,127R	12,274	10,032R
Redemptions	-4,385	-6,181R	-10,566	-15,108R
Net Exchanges	193	171R	364	-6,238R
Net New Cash Flow	954	1,118R	2,072	-11,314R

Taxable Bond Mutual Funds

	Feb 2001	Jan 2001	YTD 2001	YTD 2000
New Sales	17,179	20,026R	37,206	24,168R
Redemptions	-11,437	-13,684R	-25,121	-32,335R
Net Exchanges	1,244	1,169R	2,413	-6,471R
Net New Cash Flow	6,986	7,511R	14,497	-14,638R

Municipal Bond Mutual Funds

	Feb 2001	Jan 2001	YTD 2001	YTD 2000
New Sales	4,809	5,298R	10,107	6,766
Redemptions	-3,129	-4,060R	-7,189	-11,454
Net Exchanges	194	14R	208	-1,639
Net New Cash Flow	1,874	1,252R	3,126	-6,326

R=revised data

Table 3.
Net new cash flow of money market funds
(millions of dollars)

	Feb 2001	Jan 2001	YTD 2001	YTD 2000
Net New Cash Flow	54,876	103,017R	157,893	56,600

R=revised data

Table 4.
Liquid assets of stock mutual funds
(percent of total net assets)

Feb 01	Jan 01	Feb 00
5.9%	5.6%	4.4%

Table 5.
Annualized rate of redemptions from stock funds
(percent of average net assets)

Feb 01	Jan 01	Feb 00
25.9%	25.9%R	22.4%

R=revised data

Table 6.
Annualized rate of redemptions and redemption exchanges from stock funds
(percent of average net assets)

Feb 01	Jan 01	Feb 00
40.5%	40.9%	37.1%

R=revised data 

Table 7.
Number of mutual funds in this report

	Feb 01	Jan 01	Feb 00
Stock Funds	4,429	4,424	4,022
Hybrid Funds	528	526R	532
Taxable Bond Funds	1,334	1,342R	1,384
Municipal Bond Funds	862	865	891
Taxable Money Market Funds	704	705	699
Tax-free Money Market Funds	340	337	341
Total	8,197	8,199R	7,869

R=revised data

Highlights: Stock funds had an outflow of $3.07 billion in February, compared with an inflow of $25.06 billion in January. Among stock funds only Growth, Growth and income and Income equity funds had inflows. Aggressive growth funds had an outflow of $1.50 billion in February, compared with an inflow of $7.63 billion in January. Funds that invest abroad had an outflow of $4.38 billion for the month compared with an inflow of $3.60 in January.

February's mutual fund activity is typical of an environment of prolonged stock-price declines: Investors slow their pace of new purchases. Stock funds, for example, had a 30 percent decline in new sales in February to $80.71 billion. Redemptions declined as well, but to a lesser degree, falling 16 percent to $77.46 billion during February.

Money market mutual funds had cash flow of $54.88 billion in February. Of that amount, 39 percent, or $21.62 billion, was attributable to funds that are offered primarily to individuals. Those funds had cash flow of $20.32 billion in January. Funds that are offered primarily to institutions reported cash flow of $33.26 billion in February. Institutional investors, such as corporations, reacted to falling interest rates in alternative investments. These investors use money funds as a cash management tool, rather than an investment vehicle.