ICI Says Investors May Be Losing Interest In Investing In Mutual Funds But Recent Flows May Indicate Otherwise

Friday, July 13, 2012 09:57
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ICI Says Investors May Be Losing Interest In Investing In Mutual Funds But Recent Flows May Indicate Otherwise

Tags: investing | municipal bonds | mutual funds

The Investment Company Institute (ICI) said that investors may be losing interest in mutual funds. The ICI based its conclusions on flows for the week ending July 3, which were cut in half during that week. Domestic equity funds were the biggest losers and both taxable and municipal bond funds also saw steep declines.

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Within that scenario, tax-free money market funds saw inflows zoom to the second highest level of inflows for the year. The highest flow of funds into money markets occurred the week ended January 9.
 
Investments in municipal bond funds also picked up within the overall down scenario for mutual funds. Investors more than doubled their flows into muni bond funds, which have now seen positive flows for 42 out of the last 45 weeks.
 
So, whether the ICI’s assessment is correct may be in question based on the past week’s reversal of flows into both money market funds and muni bond funds. The highest flow of funds into money markets may mean that equities investments are still not compelling. The surge of the equities markets lost its steam by mid-March after the largest inflows to money markets occurred mid-January.

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