A big influx into bond and income mutual funds in December was due to conversion of bank trust funds to mutual funds, according to the December flow-of-funds report from the Investment Company Institute. An estimated $3.5 billion moved into bond and income mutual funds last month, compared with $1.34 billion in November. ICI researchers attributed the growth to trust fund conversions. Excluding the trust conversion assets, net new cash flow for December to bond funds was roughly similar to that of November.
Net cash flow into equity funds was down to $13.5 billion in December, compared with $17.1 billion in November. The ICI suggested stock market volatility and the tendency for mutual fund investors to defer mutual fund buying until after funds completed the year-end dividend and capital gains distributions were the factors in the reduced cash stream.
