Mutual funds rebound after late-summer slide

Inflows into long-term mutual funds last week reversed a trend of net outflows that had dominated since August. Bond and equity mutual funds combined received $13.54 billion for the week ended Oct. 23, according to estimates from the Investment Company Institute. The week before, the funds sustained $1.9 billion in outflows.
NOV 04, 2013
Inflows into equity mutual funds last week led long-term mutual funds to reverse a trend of net outflows that had dominated since August. Bond and equity mutual funds combined received $13.54 billion for the week ended Oct. 23, according to estimates from the Investment Company Institute. The week before, the funds sustained $1.9 billion in outflows. Equity funds comprised almost all of those gains, with flows equaling $13.5 billion, compared to $2.9 billion the previous week. Outflows from bond flows dropped last week, with losses of $2.3 billion compared to $5.4 billion in the previous week. The decrease occurred both in municipal and taxable bonds. The equity market is riding a high, and investors want to take part in the action, said Todd Rosenbluth, director of mutual fund research at S&P Capital IQ. “There's optimism that the market is going to continue to move higher,” he said. “Even though you may have missed some of the gains, there's still more gains to be had.” Last week's results also show that the influence of bond mutual funds, which have been an anchor on total net flows, could be dissipating, Mr. Rosenbluth said. “The fact that we're seeing half the outflows that we saw last week … is encouraging,” he said. In coming months, Mr. Rosenbluth said this week's gains in long-term mutual funds could continue if the Federal Reserve holds steady on current policy. “If we see the macro economy stay where it is, then we expect this trend to continue,” he said. “Faster tapering than expected is going to impact the fixed-income market.”

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