Stock Mutual Funds Drawing Record Cash

Stock mutual funds finished 1993 with a flourish by attracting record cash inflows in December.

But bond fund purchases continued to be relatively weak, a sign of investor concern about a potential rise in interest rates.

The Investment Company Institute, a trade group for the funds, reported Thursday that:

* Net new cash flow into stock funds in December was $14.5 billion. It was the highest monthly total ever and substantially above $9.0 billion in November.

Net new cash flow measures net dollars received by the funds, less investor redemptions, reinvested dividends and exchanges among funds in the same company.

* For bond funds, net new cash flow was $5.8 billion in December, up from $4.1 billion in November but down significantly from a $10.8-billion average inflow in the first eight months of the year.

* For the full year, both stock and bond fund inflows were a record. Stock funds took in $128.2 billion, far more than the previous record of $77.9 billion in 1992. Bond funds took in $113.6 billion, edging out the record of $108.7 billion set in 1986.

* Fund assets at year-end topped the $2 trillion mark for the first time, reaching $2.01 trillion, up from $1.98 trillion at the end of November. Total fund assets include money market funds.

The December surge in stock fund purchases was led by renewed interest in growth-and-income funds, which typically favor larger, conservative stocks. Total purchases of those funds, less reinvested dividends, was $6.06 billion in December, up from $5.01 billion in November.

So far this month, many fund companies say, stock fund purchases have remained strong.

Record Year for Funds

Net new cash flow into stock and bond mutual funds set records in 1993. Net new cash flow measures net fund purchases minus redemptions and adjusted for exchanges among funds.

Source: Investment Company Institute