Trends in Mutual Fund Investing
September 2001Washington, DC, October 29, 2001 _ The combined assets of the nation's mutual funds decreased by 4.8 percent to $6.417 trillion in September, 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: Net Assets of Mutual Funds
(billions of dollars)
|
Sept 01 |
Aug 01 |
% chg |
Dec 00 |
Stock Funds |
3,020.0 |
3,384.7R |
-10.8 |
3,962.3 |
Hybrid Funds |
324.2 |
342.6R |
-5.4 |
349.7 |
Taxable Bond Funds |
612.6 |
608.4R |
0.7 |
530.1 |
Municipal Bond Funds |
297.1 |
299.8R |
-0.9 |
277.9 |
Taxable Money Market Funds |
1,903.7 |
1,849.5R |
2.9 |
1,607.2 |
Tax-Free Money Market Funds |
259.6 |
254.6R |
2.0 |
238.1 |
Total |
6,417.2 |
6,739.6R |
-4.8 |
6,965.2 | R=revised data Highlights: Stock funds had an outflow of $29.51 billion last month, compared with an outflow of $4.82 billion in August. Although September's outflow from stock funds is the largest one-month dollar total, it represents less than 1 percent of the previous month's assets. The largest monthly outflow, measured as a percentage of assets was the $7.48 billion recorded in October 1987.
Date |
Largest Outflows
(in billions) |
% of Assets |
Sep-01 |
-$29.51 |
0.87% |
Mar-01 |
-$20.67 |
0.56% |
Aug-98 |
-$11.58 |
0.42% |
Oct-87 |
-$7.48 |
3.10% |
Aug-01 |
-$4.82 |
0.13% | Domestic stock funds had an outflow of $27.04 billion in September, compared with an outflow of $1.31 billion in August. World equity funds had an outflow of $2.47 billion in September, compared with an outflow of $3.50 billion in August. Bond funds continued to experience positive cash flow in an environment of declining interest rates. Commentary: The September data reflect reaction by stock fund shareholders to the events of September and to the bear market that began in the second quarter of 2000. New purchases and redemptions of stock fund shares have been declining since the bear market became evident in the second quarter of 2000. "Shareholders have reacted to the current bear market much in the way they have responded to bear markets since World War II," said John Rea, ICI chief economist. "As stock prices declined, shareholders slowed their purchases of new shares. Redemptions, meanwhile, declined as well." In addition, shareholders did not redeem shares en masse during the extraordinary market events of September. Stock Fund Purchases, Redemptions
|
Purchases plus exchanges in
(Dollars in Billions) |
Redemptions plus exchanges out
|
1Q-00 |
659.3 |
519.0 |
2Q-00 |
486.7 |
412.0 |
3Q-00 |
430.4 |
372.0 |
4Q-00 |
399.5 |
363.6 |
1Q-01 |
395.5 |
394.4 |
2Q-01 |
345.4 |
297.4 |
3Q-01 |
266.3 |
301.9 | In September, stock fund shareholders significantly reduced their new purchases of shares, including purchases through exchanges, to $67.80 billion from $97.91 billion in August. There was no sign of panic on the part of shareholders, as redemptions, including redemptions due to exchanges, also declined in September to $96.30 billion from $102.73 billion in August. The weakening in purchases led to the $29.51 billion outflow for the month. September's outflow from domestic stock mutual funds was the third in 2001. September's outflow from domestic stock funds represented 0.92 percent of August assets. World equity funds experienced monthly outflows six times in 2001. Stock Fund Cash Flows
|
|
|
|
|
World |
Domestic |
All Stock |
(Dollars in Billions) |
Jan |
3.5 |
21.5 |
25.0 |
Feb |
-4.4 |
1.2 |
-3.2 |
Mar |
-4.9 |
-15.7 |
-20.7 |
Apr |
1.9 |
17.3 |
19.2 |
May |
-2.5 |
20.5 |
18.0 |
June |
1.1 |
9.6 |
10.7 |
July |
-3.7 |
2.4 |
-1.3 |
Aug |
-3.5 |
-1.3 |
-4.8 |
Sep |
-2.5 |
-27.0 |
-29.5 |
YTD |
-15.1 |
28.5 |
13.4 | In contrast to stock mutual funds, bond funds experienced inflows. "Historically, strong inflows to bond funds occur in times of declining interest rates and rising bond prices. We are in such a period," Mr. Rea explained. Bond funds had cash flow of $7.63 billion in September, compared with cash flow of $16.72 billion in August. Taxable bond funds reported cash flow of $7.96 billion in September, compared with cash flow of $13.73 billion in August. Municipal bond funds had an outflow of $335 million in September, compared with cash flow of $2.98 billion in August. Money market mutual funds reported cash flow of $53.15 billion in September, compared with cash flow $26.46 billion in August. A substantial portion was placed in funds that are offered primarily to institutional investors, as corporations that use money funds as a cash management tool reacted to falling interest rates in alternative investments. Money funds that are offered primarily to institutions had cash flow of $35.07 billion in September, compared with $17.83 billion in August. Funds that are offered primarily to individuals had cash flow of $18.08 billion in September, compared with $8.63 billion in August. Net New Cash Flow of Long-term Funds
(millions of dollars)
Stock Mutual Funds
|
Sept 2001 |
Aug 2001 |
YTD-2001 |
YTD-2000 |
New Sales |
48,881 |
70,223R |
720,817 |
1,042,545R |
Redemptions |
-65,745 |
-70,619R |
-676,959 |
-797,106R |
Net Exchanges |
-12,645 |
-4,420R |
-30,386 |
28,081R |
Net New Cash Flow |
-29,509 |
-4,816R |
13,472 |
273,521R |
Hybrid Mutual Funds
|
Sept 2001 |
Aug 2001 |
YTD-2001 |
YTD-2000 |
New Sales |
4,224 |
5,683R |
51,232 |
43,397R |
Redemptions |
-4,877 |
-6,615R |
-46,533 |
-57,830R |
Net Exchanges |
-601 |
199R |
-200 |
-13,803R |
Net New Cash Flow |
-1,254 |
-733R |
4,499 |
-28,236R |
Taxable Bond Mutual Funds
| |
Sept 2001 |
Aug 2001 |
YTD-2001 |
YTD-2000 |
New Sales |
20,304 |
24,318R |
172,385 |
107,562R |
Redemptions |
-15,628 |
-13,049R |
-124,448 |
-124,269R |
Net Exchanges |
3,286 |
2,464R |
11,276 |
-14,168R |
Net New Cash Flow |
7,961 |
13,733R |
59,213 |
-30,875R |
Municipal Bond Mutual Funds
|
Sept 2001 |
Aug 2001 |
YTD-2001 |
YTD-2000 |
New Sales |
3,730 |
5,737R |
41,644 |
29,155R |
Redemptions |
-3,652 |
-3,261R |
-33,038 |
-41,621R |
Net Exchanges |
-413 |
507R |
1,121 |
-2,478R |
Net New Cash Flow |
-335 |
2,983R |
9,727 |
-14,944R | R=revised data Net New Cash Flow of Money Market Funds
(millions of dollars)
Sept 01 |
Aug 01 |
YTD-01 |
YTD-00 |
53,153 |
26,457R |
266,503 |
60,14 | R=revised data Liquid Assets of Stock Mutual Funds
(percent of total net assets)
Sept 01 |
Aug 01 |
Sept 00 |
5.6% |
5.5%R |
5.3% | R=revised data Annual Redemptions from Stock Funds
(percent of average net assets*)
Sept 01 |
Aug 01 |
Sept 00 |
24.8% |
23.3% |
26.0%R | R=revised data * Redemptions over the most recent twelve-month period as a percent of average of total net assets at beginning and ending of period. Number of Mutual Funds in this Report
|
Sept 01 |
Aug 01 |
Sept 00 |
Stock Funds |
4,682 |
4,664R |
4,235R |
Hybrid Funds |
494 |
500R |
525R |
Taxable Bond Funds |
1,299 |
1,307 |
1,348 |
Municipal Bond Funds |
823 |
833R |
873R |
Taxable Money Market Funds |
689 |
701R |
705 |
Tax-free Money Market Funds |
327 |
335R |
334R |
Total |
8,314 |
8,340R |
8,020R | R=revised data
|
