Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : The Naked Truth - Big Kahuna a Myth -- Ignore unavailable to you. Want to Upgrade?

To: IceShark who wrote (59583)	8/31/1999 2:27:00 PM
From: Cynic 2005	Respond to of 86076

August 31, 1999 -------------------------------------------------------------------------------- Stock Mutual Funds Encounter Decline In Net New Cash During Latest Month By AARON LUCCHETTI Staff Reporter of THE WALL STREET JOURNAL The flow of money into mutual funds is looking more like a trickle. Amid choppy stock-market performance, several large mutual-fund companies say investors have put less net new cash into stock funds this month than earlier in the summer. "We're seeing the usual late-summer slowdown with a little added trepidation" about the Federal Reserve's recent interest-rate increase, said Edward Giltenan, a spokesman for T. Rowe Price Associates. While July included assets from many new 401(k) investors, August has proved slower for new money arriving at the Baltimore company's mutual funds, Mr. Giltenan added. Is this the mutual-fund world's equivalent of summer dog days? Perhaps, but numbers released by the Investment Company Institute, a mutual-fund-industry trade group, showed a continuing slowdown in net new money coming into the investment products. Net new money flowing into stock funds fell 36% last month to $12.29 billion from $19.1 billion the previous July. Through July 31, stock mutual funds pulled in $102.8 billion year-to-date, down 28.62% from the first seven months of 1998. "Mutual funds are long-term investments, but people eventually take out money for retirement" and other expenses, said Chris J. Brown, an analyst at Financial Research Corp., Boston. "Consumer spending is up -- whether it's a for a house or a car, people are taking some money out of mutual funds and spending it on other things." Indeed, ICI reported total assets in mutual funds slipped for the second time in three months, falling to $6.031 trillion in July from $6.071 trillion at the end of June. Assets specifically in stock funds fell 1.7% to $3.367 trillion during the same time period. Conversely, more-defensive investments such as money-market funds grew in July from the previous month. This month, most analysts and fund companies are expecting net new cash to have slowed even more, although the figures likely will be brighter than the numbers from August 1998, when stocks took a sharp and painful slide. Funds managed by Vanguard Group, Malvern, Pa., drew about $3.1 billion in net new cash from investors through late August. That is down from the July figure of $4.26 billion, but close to the year-earlier figure, when money-market funds were the main attraction. Vanguard stock funds this month have attracted $2 billion in net new money, up from less than $1 billion in August 1998, a Vanguard spokesman said. Vanguard's main attraction continued to be its passively managed index funds. The firm's Vanguard 500 Index Fund, which tracks the Standard & Poor's 500-stock index, remained the industry's best-selling fund of the year through July, according to Financial Research, pulling in $1.18 billion last month alone. The second best-selling fund of July was also a Vanguard index fund, this one based on the Wilshire 5000 stock index, according to the research firm. Because of their recent strong performance compared with funds run by stock pickers, index funds have drawn new investors, even as many funds suffer higher redemptions. Through July, 38% of the net new cash invested in stock and bond funds this year went to index products, up from 14% for the year-earlier period, Financial Research's Mr. Brown said. Fidelity Investments said its August cash flows, through last Friday, totaled more than $4 billion. A Fidelity spokeswoman said the total is roughly double last year's figures for the same month, but down from about $7 billion in July. The mutual-fund giant said its money-market funds had received about $3.4 billion this month, and stock funds received more than $900 million. Bond funds suffered a small outflow of about $100 million. Among stock funds, sectors favored by Fidelity investors during August included international and growth. At T. Rowe Price, a Japan stock fund sold briskly. Sectors with weak inflows at Fidelity included asset-allocation funds. Write to Aaron Lucchetti at aaron.lucchetti@wsj.com