NEW YORK -- With interest rates down and the dollar falling, Americans are pouring money at a near-record pace into mutual funds that invest in bonds, and much of that money is going into funds that buy foreign bonds, fund managers said yesterday.
But stock fund sales, which have been strong for all of 1992,
weakened this month as some investors grew more cautious.
Investors searching for higher yields have increasingly been fleeing banks and money market funds, and much of the money has gone into bond funds.
Figures released yesterday by Investment Company Institute, a trade group, showed that a net $11.8 billion flowed into bond funds last month, 31 percent greater than in June and the second-largest monthly figure ever.
The record month for bond fund cash flow was set in January 1987, when $12.8 billion was invested. That was near the end of the last bull market in bonds, which drove long-term rates down to levels not seen again until this month.
The cash flow figures include both new sales and redemptions, as well as transfers among various fund groups. But the figures ** exclude reinvested dividends.
In July, stock prices were generally higher, and the Standard & Poor's 500-stock index reached a record high. That spurred investors to put a net $6.8 billion into stock funds, up 46 percent from a depressed June figure of $4.6 billion. The June figure, which the trade group revised downward from $5.3 billion, was the lowest for any month since November.
Over all, the cash flow into long-term funds, both those specializing in stocks and bonds, came to $18.63 billion in July. That figure was also the second-highest ever, just trailing the $18.68 billion figure for January 1987.
The stock market has weakened this month, in part because of concern over the dollar, and fund managers said some stock fund owners had decided to take profits.
"Our stock fund activity is down 64 percent from July, but remember that July was one of our strongest months," said Steve Norwitz, a spokesman for T. Rowe Price funds.
At Fidelity Investments, the largest mutual fund company, there was an increase in new sales of stock funds in August, said Michael Hines, a spokesman. But he added that this increase was offset by the fact that some investors had moved money from stock funds to other funds in an attempt to time market movements.
Such investors are often fickle, and one of the most striking facts about the surge into stock funds this year has been that the market timers have stayed positive. New transfers into stock funds were positive for four straight months, from April through July. Comparable records back to 1984 show no previous three-month string. T. Rowe Price's best-selling fund this month was a new one, started at the beginning of the month, that specializes in short-term investments overseas. So far, it has taken in $35 million.
A similar fund at Scudder, Stevens & Clark had net cash flow in August of about $265 million, a spokesman, Gavin Quill, reported. That fund, which began this year with assets of $348 million, now boasts assets of $1.25 billion.