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Money Inflows Point To Further Stock Gains

Sat., Dec. 28, 1996

U.S. stock mutual fund investors poured $3.56 billion into mutual funds in the six days ended Christmas Eve, reversing a three-week pullout.

The net new fund inflows, which excluded reinvested dividends, were the largest since Nov. 20 and took place in an abbreviated reporting period, according to estimates by AMG Data Services, a California group that tracks money flows.

About two-thirds of the new investment was due to a normal, year-end push by consumers to add to mutual funds after receiving dividend payouts. There were signs, such as higher investments in technology stock funds, that people are getting more aggressive after a month-long lull.

The surge capped a record year, as small investors pumped more than $200 billion into U.S. equity funds, up from $129 billion in 1995, AMG said. Many analysts say the inflow of money into mutual funds is a catalyst for a stock market rally that has pushed the Dow Jones Industrial Average up 27 percent since Jan. 1.

The jump in stock mutual fund assets followed three weeks when investors pulled almost $3 billion out of stock funds, AMG said.

Many investors put money into specialized funds that indicate active bets on segments of the market, reversing declines in the assets of aggressive growth funds and small company stock funds, AMG said. Technology stock fund investments rose by $171 million in the six days ended Dec. 24.

IRS to ease refund deposits

The Internal Revenue Service plans to make it easier for taxpayers to have their income tax refunds deposited directly into their bank accounts, instead of getting a check by mail.

The IRS introduced direct deposit for income tax refunds in the 1996 filing season. But to take advantage, you had to fill out a separate form and file it with your Form 1040.

That meant extra time and extra paperwork, for taxpayers and for the IRS. And only about 8 percent of taxpayers who received refunds took them in the form of direct deposit, Richardson said.

In the coming filing season, you won’t need an extra form. If you want direct deposit, you’ll need only to fill out a few lines that are printed right on your Form 1040, she said.

As a result, Keith said, “We’ll see a dramatic increase in the number of people making that election.”

Also for the first time, taxpayers who file returns by phone will be able to get their refunds by direct deposit, too, Pyrek said.

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