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Investors love tech funds
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September 3, 1999: 5:24 p.m. ET
Still, stock mutual funds are hammered with outflows of $2 billion this week
By Staff Writer Martine Costello
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NEW YORK (CNNfn) - Investors seem to be running for the exits at mutual funds lately, but there are a few bright spots in the industry.
U.S. stock funds had outflows of $2 billion in five days through Wednesday, but technology funds and large cap index funds both had healthy inflows, said Robert Adler, president of AMG Data Services.
The trend is all the more remarkable because technology and large-cap index funds are such small sectors in the fund universe, Adler said. Technology and large-cap index funds represent about 10 percent of all mutual fund assets.
"We have two very focused areas of the market that are very positive," Adler said.
Technology funds had inflows of $185 million, while large cap index funds had $86 million, he said.
"It's the third week of outflows we've seen," Adler said.
What's happening? Investors could be taking some profits after reaping big gains to pay for a vacation home or their children's college educations. They may be fed up with fees. The stock market also was hit with losses in recent sessions as investors worried about inflation and rising interest rates.
But you probably don't need to worry that the fund industry is on the way out, said Russ Kinnel, editor of mutual funds at fund-tracker Morningstar. Funds may be tarnished somewhat but that may be a factor of a strong bull market, he said. He pointed out that there are more assets in mutual funds than in U.S. banks.
"I don't see funds going away," Kinnel said.
How much is your mutual fund costing you? Vanguard Group, a champion of low fees thanks to founder John Bogle, has a new tool on its Web site that shows how annual fees take a bite out of your returns.
For example, the company said the total cost over 20 years for a $10,000 initial investment in Vanguard Total Stock Market Index Fund would be $3,786, compared with $12,305 for a "well-known" growth and income fund. (The company didn't identify the competing fund.)
International funds had outflows of about $1 billion in five days as of Wednesday, AMG Data said. But there were some winners for the week.
According to Lipper Analytical Services, the three top funds for the week Aug. 26 through Thursday were: Warburg Pincus International Equity Fund, up 3.05 percent for the week and up 17.71 percent year to date as of Thursday; followed by Reserve International Equity Fund, up 2.94 percent for the week and up 13.76 percent year to date; and Warburg Pincus International Equity Fund, institutional shares, up 2.74 percent for the week and up 17.90 percent year to date.
Among the top losers were Worldwide Growth Fund, down 3.10 percent year to date and down 10.51 percent for the year; Davis International Total Return Fund, class A shares, off 2.21 percent for the week but up 2.60 percent for the year; and World Growth Fund, down 2.04 percent for the week but up 6.79 percent year to date.
-- Staff Writer Martine Costello covers mutual funds for CNNfn.com. If you have any comments about funds, you can contact her at cnnfn.interact@turner.com
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