Investors move into stock mutual funds cautiously
BOSTON (AP) — The Dow Jones industrial average continues to set new records but average investors are still proceeding with caution.
While they added to U.S. stock funds in the first two months of the year, they put larger amounts into bonds and funds investing primarily in foreign stocks, according to mutual fund industry consultant Strategic Insight.
Investors recognize "that it's necessary to spread one's risk and wealth creation aspiration broadly and globally," said Avi Nachmany, research director with the New York-based firm.
Net deposits into stock and bond mutual funds, both foreign and U.S., totaled $140 billion through the first two months of 2013, the firm said on Tuesday. That matches the record total for the first quarter of 2007. The year-to-date total for funds investing in U.S.-issued and foreign bonds is $64 billion. For U.S. and foreign stock funds, the total is $44 billion.
For February, a net $6 billion was deposited into U.S. stock funds. While that was down from $26 billion the previous month, it represents a shift from 2012, when withdrawals exceeded deposits over the final 10 months of the year. In fact, cash had been pulled out of U.S. stock funds for six years in a row.
This year's figures suggest that investors are beginning to become comfortable with stocks again following the financial meltdown and market plunge of 2008-2009.
Deposits into stocks helped push the Dow toward a record reached on March 5. And the index has climbed higher every day since. The Standard & Poor's 500 index has risen nearly 9 percent this year and is just short of its own record.
Investors have been encouraged by strong fourth-quarter earnings reports, and by the Jan. 1 agreement between Congress and the White House to avert the worst effects of the so-called "fiscal cliff."
Here are more details about how investors moved their money in February, according to Strategic Insight: