Investors shoved $18.31 billion into stock funds in May, surpassing April's $11.90 billion. Bond funds had record monthly inflow of $31.65 billion.
It was the third in the past five months of positive stock fund flow, according to the Investment Company Institute.
Signs pointed to further inflow this month.
May was the largest monthly stock fund inflow since February 2007. And it was the first back-to-back inflow since April-May 2008.
Funds that invest primarily in the U.S. took in $14.06 billion in new money in May. They took in $9.39 billion the month before. During the month, the S&P 500 rose 5.31%.
Stock funds that invest primarily overseas took in $4.25 billion from investors vs. $2.51 billion inflow in April.
During the month, the MSCI EAFE index rose 11.02%, while the dollar fell 6.30%.
Year to date, stock funds gave back $12.58 billion vs. $18.31 billion outflow in the year-earlier period.
ybrid funds, which invest in both stocks and bonds, had inflow of $2.80 billion in May vs. $2.07 billion inflow the previous month. For the year to date, hybrid funds surrendered $3.82 billion vs. $9.56 billion inflow a year earlier.
Bond funds' record $31.65 billion inflow in May was up from April's $28.53 billion inflow, also a record. May's inflow surpassed the $27 billion inflow for all of 2008.
Investors shifted to bonds as the yield curve steepened slightly. Rates on long-term Treasury bonds rose 0.31 percentage points to 3.47%, while three-month T-bill rates stayed flat at 0.14%.
Ballooning Bond Funds
For the year to date, bond funds had inflow of $113.62 billion vs. $78.10 billion inflow a year earlier.
Taxable bond funds took in $25.11 billion vs. $23.43 billion in April. Year to date, they had inflow of $90.30 billion vs. $63.34 billion a year earlier.
Investors put $6.54 billion into municipal bond funds vs. inflow of $5.09 billion the prior month. Year to date, inflow was $23.32 billion vs. $14.76 billion a year earlier.
Money market funds saw outflow of $25.80 billion in May vs. $23.23 billion in April, as investors shifted cash to stocks and bonds.
Institutional money fund inflow slowed to $7.19 billion from $27.71 billion inflow the month before. Money funds that cater to individuals had outflow of $32.99 billion vs. outflow of $50.95 billion the month before.
Fund assets rose by $373.8 billion, or 3.9%, to $10.074 trillion from $9.700 trillion the month before. They stood at $12.263 trillion a year earlier.
Stock fund assets rose $295.3 billion, or 8.0%, to $4.005 trillion from $3.709 trillion the prior month. They were $6.332 trillion a year earlier.
Hybrid fund assets rose $28.1 billion, or 5.7%, to $521.5 billion from $493.4 billion the month before and $719.3 billion a year earlier.
Bond fund assets rose $74.9 billion, or 4.4%, to $1.781 trillion from $1.706 trillion the month before and $1.765 trillion a year earlier.
Money market fund assets fell $24 billion, or 0.63%, to $3.767 trillion from $3.791 trillion the month before and $3.448 trillion a year ago.
June Jumps Too
Early indications were that inflow increased in June. The ICI's weekly estimates totaled $37.4 billion through June 17.
U.S. stock fund inflow was an estimated $6.8 billion. World equity funds took in $6.2 billion.
For the year through June 29, the S&P rose 0.88%, while the MSCI EAFE fell 0.40%. The yield on the 10-year Treasury note rose 5 basis points as the Fed stood pat on credit conditions.
Vanguard said that investors continued to shift cash into stock funds from money market funds in June.
The fund giant said it had $11 billion inflow to its stock, bond and balanced funds in May. Shareholders pulled $3.7 billion from its money market funds.
