Vice President Joe Biden crosses his fingers as U.S. Conference of Mayors President, Philadelphia Mayor Michael Nutter projected on a monitor, makes his remarks at the U.S. Conference of Mayors 81st winter meeting in Washington, Thursday, Jan. 17, 2013. (AP Photo/Manuel Balce Ceneta)

Cash continues to flow into stock and bond funds

Published: 10:21:26 PM, Wed 23 January 2013 UTC

Investors continued to add money to stock mutual funds in the second full week of 2013, reversing course from last year. Bond funds continued to attract new cash.

Stocks:

Investors deposited a net $5.05 billion into U.S. stock funds during the weeklong period ended Jan. 16, the Investment Company Institute said in a preliminary report Wednesday. That was down from the previous week's net deposits of $7.73 billion.

Before the period ended Jan. 9, withdrawals from U.S. stock funds had exceeded deposits for 24 weeks in a row, dating to mid-July.

Investors have been encouraged this year by the so-called "fiscal cliff" agreement reached Jan. 1 between Congress and the White House. The deal limited income tax increases to the highest earners and delayed automatic federal spending cuts. Stock rallied on the agreement, and the Standard & Poor's 500 index gained 4.8 percent for the year through Wednesday.

Investors have also been adding cash this year to funds investing primarily in foreign stocks. A net $4.27 billion was added to those funds in the latest weeklong period, down from nearly $7 billion in the preceding week.

Bonds:

Bond mutual funds consistently added cash through 2012, a trend that has continued into the new year. Investors deposited a net $10.6 billion into bond funds during the period ended Jan. 16, up from $9.42 billion in the previous week.

A net $8.36 billion was deposited into taxable bond funds, which primarily invest in corporate bonds. Investors added $2.24 billion to municipal bond funds, which invest in bonds issued by state and local governments.

During the latest week, a net $2.12 billion was deposited into hybrid funds, which invest in both stocks and bonds.

Overall, investors deposited a net $22.04 billion into long-term mutual funds of all types during the week. That was down from net deposits of $26.55 billion in the previous week.

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