Investors Warming Up to Funds

Despite rallying stock and bond markets, mutual funds took in less new cash from small investors in March than in February, the funds’ chief trade group said Thursday. But this month buyers have returned in greater numbers, many fund companies say.

The Investment Company Institute reported Thursday that net new cash flow into stock funds dipped slightly to $7.2 billion in March from $8.6 billion in February.

Bond funds, meanwhile, saw a net $3.7 billion flow out in March, up from February’s $1.1-billion outflow.

Net new cash flow measures fund purchases minus redemptions, reinvested dividends and exchanges among funds in the same family.

If small investors were suspicious about the rising markets in March, however, they turned more bullish this month, many fund companies say. Tax season helped, as many Americans opened new individual retirement accounts with funds by April 15.

Fidelity Investments, the nation’s largest fund group, said a net $600 million came into its domestic stock funds in April, up from $400 million in March. It was Fidelity’s best showing among its domestic stock funds in the past six months.

T. Rowe Price Associates, Vanguard Group and Scudder Stevens & Clark, among others, also reported strong April stock fund inflows. And some companies, such as Invesco Funds, say buyers are warming up to international stock funds again.

Most fund firms also say bond fund flows improved in April, though in many cases the companies are still seeing more money leave the funds than enter.