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Investors Slow Purchases of Stock Funds

They add to international stock funds but pull money out of domestic stock funds.
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Investors are still adding to their holdings of equity mutual funds, but at a slower rate than they did after the


rate cut.

Investors contributed a net $4.12 billion into all equity mutual funds over the five business days ended Wednesday, according to TrimTabs Investment Research of Santa Rosa, Calif.

This was down from the previous week's total of $13.26 billion, when investors responded to the Fed's rate cut by opening up their wallets.

Domestic stock funds were on the losing end, as investors withdrew a net $591 million, in contrast with the previous week's $8.49 billion inflow.

But investors continued to buy funds that invest primarily in non-U.S. stocks, which pulled in $4.71 billion. That was down just slightly from the previous week's total of $4.76 billion.

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"It was a quiet week from a fund flow perspective," says Conrad Gann, president and chief operating officer of TrimTabs. "International flows were on pace for their average, and the outflows of U.S. directed equities are a reversal of inflows we saw in the prior two weeks, but not a dramatic reversal."

"At the end of the day," Gann adds "it's a continuation of the trend we've seen with retail investors biased toward global funds over U.S. funds."

Bond funds picked up the pace, taking in a net $1.13 billion, up from the previous week's inflow of $453 million. Hybrid funds, which invest in both stocks and bonds, took in $483 million compared with inflows of $194 million the previous week.

Exchange-traded funds that invest in U.S. stocks lost ground, as $8.10 billion walked out the door, partially reversing the $22.42 billion of inflows the previous week.

ETFs that invest in non-U.S. stocks were on the upswing, with inflows of $3.19 billion vs. inflows of $2.03 billion during the previous week.


Dow Jones Industrial Average

closed at 13,878.15 Wednesday, up from 13,815.56 on Sept. 19.