May Net Fund Outflow Slowed

Despite the return of extreme volatility to financial markets, U.S. mutual fund investors withdrew a net of roughly $7 billion from stock and bond mutual funds in May 2010, according to Strategic Insight (SI), an Asset International company.

May’s modest redemptions contrasted the nearly $170 billion of net inflows to stock and bond funds in the first four months of 2010 (the bulk of which went to bond funds), SI said.

Besides alarming stock market declines–the average stock fund investor lost 8% in May–investors faced European debt and currency worries. These factors triggered net redemptions of $16 billion from equity funds in May, according to the SI Simfund database.  Such redemptions amounted to just 0.3% of equity fund assets.

Meanwhile, bond funds experienced net inflows of $8 billion in May. Inflows persisted among many bond funds used for cash management. Other kinds of bond funds (high-yield, global income), where price deterioration occurred due to economic uncertainty or Euro depreciation, experienced modest outflows.