Near-daily reports of indictments, imprisonments, bans, bars, and fines in the mutual fund industry apparently haven't destroyed Americans' appetite for stock funds. AMG Data Services reported yesterday that Americans put $40.8 billion into stock mutual funds in January. It was the highest monthly inflow since early 2000 and the third highest since 1992.
The New York Times reported this morning that much of the money is going into areas that performed well last year. International stock funds accounted for $9.7 of the $40.8 billion. Another $2 billion went into global funds. Small cap funds took in $5.4 billion.br>
Some of the inflows came from retirement accounts. According to Hewitt Associates, which began publishing the Hewitt 401(k) Index in 1997, "January marked the most decisively equity-oriented transfer activity month in the Index's history." Close to $1 billion was shifted from GCI/stable and bond investments to equity. These transfers, along with improving market values, pushed 401(k) participant equity levels to 66%, their highest level since May of 2002.br>
Sentiment towards the market is favorable. The Market Vane Bullish Consensus, a measurement of advisor recommendations is at a 24-month high of 70%, and Greenspan announced this week that he expects the economy to grow briskly. Some analysts, however, warn against being too bullish. The Dow and the S&P have risen steadily without a major correction since April, and one could be on the way. The New York Times quoted Rich Ishida, senior market analyst at Market Vane: “We are advising anyone who is real bullish to be cautious.”br>
Inflows continued to be strong in February. AMG reported inflows of $4.1 billion for the week ended February 11, and $3.8 billion for previous week.
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