U.S. Mutual Funds Attract Most Deposits in Almost Two Years With Bonds

U.S. mutual funds attracted the most money in almost two years last week as investors poured cash into bond funds and some returned to stock funds.

Funds had net deposits of $11.3 billion in the week ended Jan. 11, the Investment Company Institute said today in an e- mailed statement. The last time mutual funds took in that much money was the week ended April 21, 2010, when they gathered $12.6 billion in deposits, according to the Washington-based trade group.

“If Europe and the U.S. do better, we may see some money flow back into stocks,” Russel Kinnel, director of mutual fund research at Chicago-based Morningstar Inc. (MORN), said in a telephone interview. “People seem to be responding to headlines.”

Investors put $753 million into funds that buy U.S. stocks last week, the first time those funds had net deposits since August, ICI data show. Funds that buy international stocks got $681 million. Taxable bond funds won $6.12 billion and municipal bond funds collected $1.74 billion, the most in any week since October 2009.

The Standard & Poor’s 500 Index has gained 4 percent this year on better news about the U.S. economy. Factory output climbed 0.9 percent last month, the biggest increase since December 2010, according to Federal Reserve data released today. Confidence among U.S. homebuilders rose in January to the highest level in more than four years as sales and buyer traffic improved.

To contact the reporter on this story: Charles Stein in Boston at cstein4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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