Stock Fund Cash Inflows Slow in April

Cash inflows into stock mutual funds have slowed in April from March’s strong pace, but the funds are still attracting a bundle from investors, fund companies say.

Fund managers, meanwhile, now are more fully invested in stocks than at any time in 22 years--a sign of managers’ fear of missing out on further market gains.

The Investment Company Institute, the chief trade group for the funds, said Wednesday that stock funds took in a net $23.2 billion in new cash in March, compared with $24.2 billion in February.

The March figure was below the ICI’s initial estimate of $27.5 billion. Still, it was well above the $10-billion inflow of March 1997.

Bond funds attracted $6.4 billion in fresh cash in March, up slightly from February, the ICI said.

In April, stock funds overall will attract about $18.7 billion in net new cash, according to estimates by Trim Tabs Financial Services.

“People are taking a breather after three strong months,” said a spokesman for Charles Schwab Corp. A net $1 billion flowed into stock and bond funds via Schwab’s fund marketplace this month. That’s down from $2 billion in March.

Yet some fund companies say their April fund inflows were higher, boosted by individual retirement account contributions before the April 15 tax deadline.

Vanguard Group, T. Rowe Price Associates and New England Funds have collected more money from investors in April than in March, in large part because of an increase in IRA and 401(k) assets.

As fast as cash has flown in the door of stock funds, managers have funneled it into the market. The result: Stock funds’ liquid (cash) assets fell to 4.7% of total assets in March from 5% in February and now is the lowest since 1976.

The potential downside: If investors’ fund purchases should slow, fund managers have little ammo left to power stocks higher.