Stock mutual fund cash inflows in January are highest in decade

The newfound confidence investors showed at the start of the year held up through the end of January, boosting cash flows into stock mutual funds to the highest levels in more than a decade.

By one measure, the funds attracted cash at the fastest pace in 17 years. The $34.2 billion of net deposits in stock mutual funds and exchange-traded funds for the four weeks ended Jan. 30 was the largest four-week total since January 1996, Lipper reported.

Other fund researchers also reported high levels of cash came in as stock prices climbed to five-year highs. January was the first time in 11 months that deposits into US stock funds exceeded withdrawals.


That has led to predictions that stock funds will continue to attract cash in coming months.

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‘‘As economic life across America slowly improves, investment in stock funds will increase, too,’’ said Avi Nachmany, research director at the industry consultant Strategic Insight.

If flows continue to be positive, 2013 would be the first year since 2006 that US stock funds have attracted cash, according to Strategic Insight. Nearly $405 billion has been pulled out since the beginning of 2007, the year the stock market hit a historic high.

Investors were encouraged in January by mostly strong fourth-quarter earnings reports and by the Jan. 1 agreement between Congress and the White House to avert the worst effects of the so-called fiscal cliff. The Standard & Poor’s 500 stock index was up 6 percent through Tuesday.

Those and other factors ‘‘have helped investors overcome, at least for now, a state of investment anxiety,’’ Nachmany said.


In the latest weeklong period, ended Jan. 30, investors deposited a net $3.5 billion into US stock mutual funds, the Investment Company Institute said Wednesday. That boosted the four-week total flowing into stock funds to $19.6 billion. That was the most since the ICI, an industry trade organization, began tracking flows on a weekly basis in 2007.

Lipper, a unit of Thomson Reuters, said the four-week total of $20.7 billion for US stock mutual funds and foreign stock funds — excluding ETFs — was the largest since April 12, 2000.

While figures covering the final day of January are not yet available, Strategic Insight said in a preliminary report that the full-month flow into stock funds was likely to be the largest in nine years. In January, investors deposited a net $51 billion in stock funds and hybrid funds, which invest in a mix of stocks and bonds. That was the most since $56 billion flowed in during January 2004.

While stock-fund flows reached the highest levels in years, investors continued to add to bond mutual funds last month. Those funds attracted $31.6 billion in net deposits.