Investors still hunger for funds Slowdown in markets does not deter many

April 14, 1996|By NEW YORK TIMES

NEW YORK -- Despite last week's rough ride in the stock and bond markets, evidence mounted that investors were not losing their appetites for stock and bond mutual funds. Far from it: A mutual fund trade group estimated that investors poured more cash into stock and bond funds in the first quarter of 1996 than in the first nine months of last year.

The Investment Company Institute, a mutual fund trade group, estimated that stock and bond funds took in a net $23 billion in March. While that was down slightly from February's total, it also supported contentions by mutual fund companies that individual investors did not flee the markets after a sharp decline in stock prices early last month.

"Investors have had a very minimal reaction to short-term drops in the stock market," said Mark Geist, president of Montgomery Asset Management, a fund company based in San Francisco.

While it is too early to tell whether the most recent downturn in the market will have any effect, a newsletter that tracks mutual funds says that a record amount of money flowed in stock funds in the first week of April. In any case, the rising tide of cash into mutual funds shows no sign of weakening. Even executives at fund companies have expressed surprise over the strength of the trend. In addition to the possibility that investors have simply started saving more, another source may stem from tax refunds, which appear to be significantly higher this year than last. The Internal Revenue Service has certified tax refunds to individuals totaling $52 billion through the end of March, a 25 percent increase from 1995.

In March, mutual funds that invest primarily in stocks took in a net $21 billion, down slightly from $21.9 billion in February and $28.9 billion in January. The first-quarter total of $71.8 billion was more than three times the net cash inflow of last year's first quarter.

Pub Date: 4/14/96

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