Cash Flows Into Stock, Bond Funds Rose Sharply in July

Net cash inflows to stock mutual funds were sharply higher last month, the Investment Company Institute estimated Thursday, confirming what many major fund companies said last week.

The ICI, chief trade group for the funds, estimated that stock funds took in $23 billion in July, up from $16.6 billion in June and the highest monthly total since the funds received a record $29.1 billion in January. Bond fund inflows also increased sharply last month, to an estimated $4 billion, up from $2.1 billion in June and the highest since January 1996, when bond funds took in $4.3 billion.

Stock fund cash inflows had declined in March and April as the market slumped, but the drop in inflows had more to do with rising redemptions by some fund shareholders than with a weakening of new fund share purchases overall.

In July, when the Dow industrials soared 7.2%, investors again were avid stock fund buyers.

At the same time, the rise in bond fund inflows could mean that more investors are hedging their stock bets by diversifying, analysts say.

Meanwhile, the ICI said assets of money market funds this week rose above the $1-trillion mark for the first time, reaching $1.01 trillion, versus $990.1 billion last week.