Investing January 22, 2005

Global Funds Grow, Domestic Shrink as Trends Continue in December

January 21, 2005 (PLANSPONSOR.com) - Inflows into stock mutual funds were $12.4 billion in December, half of November's inflows due to seasonally light activity.
Reported by

The Lipper FundFlows Insight Report for December shows that stock funds took in $6.2 billion in the last month of the year, with mixed-equity funds bringing in another $6.2 billion, bringing the total to $12.4 billion.

This movement reflected caution and an overseas appetite for investors, according to the report (See Money Market, World Equity Funds Strong Draw in November ). This appetite was indicated most prominently by the $6.8 billion inflow into world equity funds, compared to only a $900 million inflow into US diversified funds. The domestic sector actually saw an outflow of $1.7 billion on the month.

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US Large-cap funds saw the biggest outflow on the month, posting losses of $7.9 billion. Multi-cap funds saw the greatest inflows at $5.2 billion.

Bond funds lost out on the month, posting outflows of $2 billion. Municipal bond funds’ flows were proportionally more negative then those of taxable-bond funds, according to the report. Assets in municipal bonds are only 38% of taxable-bonds, but both posted $1 billion outflows on the month. Breaking it down, long-term bonds actually gained $100 million on the month, but this gain was offset by a $2.1 billion outflow in short and intermediate bonds.

Money market funds also suffered in December, posting outflows of $5.5 billion. This consisted of $10.5 billion outflows in the retail class and $5 billion inflows in the institutional class.

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