Stock funds drew inflow In January … then gave it up in February

Ken’s Take: Mutual fund inflows are generally an indicator or market strength.   Chmn Bernanke testified that Jan. inflows were up.  Made me curious re: the actual data.  He forgot to mention that February outflows more than offset January’s inflows. Oops.

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Source: IBD, “Stock Funds Drew Inflow In January”, 2/26/2009

In a notable reversal, investors stuffed $9.05 billion into stock funds in January.

It was the first inflow into stock funds since May 2008, after seven straight months of outflow.  January’s net inflow was a sharp U-turn from December’s $20.43 billion outflow.

It was a welcome contrast to January 2008’s net outflow of $43.67 billion. January is one of the biggest inflow months of any year. That’s often when bonuses get invested and retirement accounts get started or funded.

Still, there were indications that the situation deteriorated during February.

The inflow couldn’t make up for the declining stock market in January. Fund assets fell by $191 billion, or 2%, to $9.411 trillion in January from $9.601 trillion the month before. They stood at $11.999 trillion at the end of December 2007.

Stock fund assets fell $269.1 billion, or 7.3%, to $3.439 trillion from $3.708 trillion the prior month. They were $6.521 trillion at the close of 2007.

Early indications were that flows decreased in February. Stock funds gave back $10.6 billion in February through Feb. 24

http://www.investors.com/editorial/IBDArticles.asp?artsec=19&issue=20090226

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