U.S. Equity Funds Take A Hit
Investors pulled money from U.S. equity funds for the first time this year as the market lost most of its 1997 gains, according to an industry report.
Stock funds suffered net redemptions of almost $330 million in the week ended Wednesday, according to AMG Data Services, an Arcata, California-based group that tracks mutual fund money flows. Most of the net outflows affected the most risky types of stock funds such as “aggressive growth” funds.
The amount of money that left stock funds in the past week is puny when compared with the $47.55 billion that cascaded into equity funds during the first two months of the year.
“A very few number of customers are making portfolio changes in response to the recent market volatility,” said Christopher Wilson, who oversees the marketing support group at Scudder, Stevens & Clark Inc. “It’s nothing like what happened in ‘87.”
The stock market crash of 1987 caused significant numbers of investors to move cash to money market funds from stock funds, and some to flee the equities market altogether, said Wilson, who worked at Fidelity Investments at the time. That isn’t even remotely the case today, he said.
The report from AMG indicates about $1.4 billion was pulled from growth-related funds in the past week and an additional $660 million was redeemed from junk bond funds on concerns that higher interest rates will hurt companies with lower credit ratings. It marked the third straight week that money left junk bond funds, AMG reported.
The redemptions are occurring as the Dow Jones Industrial Average falls for its sixth day in the past seven. The benchmark stock average is down 4 percent this week, falling below the 6500 level, and barely above where it was at the start of the year.
“The only funds that took in significant money in the past week were the ‘growth and income’ and international funds,” said Robert Adler, AMG’s president.
The most popular funds were Fidelity Growth & Income, some of Vanguard Group’s stock index funds and Scudder Growth & Income, Adler said.