Stock Fund Inflows Rebound in March

As the stock market surged this month and the Dow Jones industrial average finally hit 10,000, net new investments into stock mutual funds have returned to normal levels, after a dismal showing in February.

Stock funds are on track to attract $22.6 billion in net new money in March, according to the Santa Rosa-based research firm Trimtabs.com.

“It’s a complete reversal of fortune from February,” said Greg Gable, a spokesman for the discount broker Charles Schwab.

Indeed, figures released Tuesday show that stock funds attracted just $757.7 million in new money in February--the second-worst month for mutual fund cash flows since January 1991.

“It’s nothing--it’s pocket change,” Carl Wittnebert, Trimtabs’ director of research, said of the February flows.

February has historically been a strong month for investments into stock funds, as tax-wary investors fund their individual retirement accounts. But investors apparently had their minds on short-term market movements, not long-term retirement savings.

Most of the major stock market indexes were down in February, with the Standard & Poor’s 500 index of blue-chip stocks losing 2.6% and the Russell 2,000 index of smaller stocks dropping nearly 8%.

The big losers in February were again funds that invest in foreign and small-company stocks.

Investors pulled a net $5.1 billion from world equity funds in February and a net $3.6 billion from aggressive growth funds, which serve as a proxy for many small-company stock funds, according to the Investment Company Institute, the fund industry’s chief trade group.

At the same time, bond funds attracted $4.4 billion in February, and ultra-safe money market funds pulled in a net $21.4 billion.

Among the fund complexes reporting strong March stock fund flows are Fidelity Investments, Vanguard Group, Schwab, Janus and Invesco. T. Rowe Price is reporting a flat month for stock funds, and Strong Funds is reporting net redemptions of $71 million.