Funds See Net Outflows in September

September brought with it net inflows into equity funds, rising from what a Lipper FundFlows Insight report calls ‘paltry’ August figures (See Lipper: Markets Still Driven by Caution ). Despite the up-and-down September stock market, investors mildly increased their inflows into bond funds, possibly taking advantage of more stable international equity markets, the analysis states. In total, a $9.2 billion inflow was seen in equity funds, with World Equity Funds seeing a $3.6 billion inflow. The S&P 500 index inflows were only $100 million, a small number that Lipper attributes to stiff competition from ETF-format products.

Bond fund flows benefited from both moderating rates and ongoing caution about stocks, Lipper reported. This is the second month in a row that the numbers have indicated a net inflow, after four months of steady net outflows. In total, $1.8 billion flowed into non-money market bond funds in September.

Money Funds experienced a typical seasonal outflow in September, but their net runoff was smaller than it was last September. New outflows for the month neared $30 billion in September, which is commonly a heavy outflow month due to tax-payment cycles and corporate operating-liquidity needs. A large amount of the outflows can be attributed to institutional needs, according to Lipper.

In total, the funds business had a net outflow of $19.3 billion for the month. Lipper is attributing the overall caution to the upcoming election, and warns that possible recounts and legal troubles could prolong the investor caution that prevails.