Stock mutual funds attracted new cash for the second week in a row during the period ended March 20, as investors again demonstrated confidence in a market that they mostly avoided last year. Bond funds continued to bring in new money, showing that the recent flow into stock funds is not coming at the expense of bonds.
Investors deposited a net $1.25 billion into U.S. stock funds during the weeklong period, the Investment Company Institute said in a preliminary report Wednesday. The total was 47 percent more than the $849 million that was added in the previous week.
Deposits into stock funds have exceeded withdrawals in nine of 11 weeks year-to-date, reversing course from last year. Before the period ended Jan. 9, withdrawals from U.S. stock funds had exceeded deposits for 24 consecutive weeks, dating to mid-July.
Investors have been encouraged by recent data about jobs and the housing market. Those numbers, combined with mostly strong fourth-quarter earnings reports, suggest the economic recovery is accelerating. The Standard & Poor's 500 index has gained 9 percent for the year through Tuesday, and the index added 0.3 percent during the week ended March 20.
Investors have also been adding cash this year to funds investing primarily in foreign stocks, and those funds attracted far more than U.S. stock funds in the latest week. A net $3.75 billion was added to those funds in the period, extending the streak of net deposits in that category to 11 weeks.
Bond mutual funds have consistently attracted cash in recent years, a trend that has extended into 2013. Investors deposited a net $5.95 billion into bond funds during the period ended March 20, more than triple the $1.64 billion in the previous week, according to ICI, a fund industry trade organization.
During the latest week, a net $6.23 billion was deposited into taxable bond funds, which primarily invest in corporate bonds. Investors withdrew a net $278 million from municipal bond funds, which invest in bonds issued by state and local governments.
A net $1.41 billion was deposited into hybrid funds, which invest in both stocks and bonds.
Overall, investors deposited a net $12.36 billion into long-term mutual funds of all types during the week. That was up from net deposits of $7.57 billion in the previous week.