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The Money Flows In. The Value Keeps Falling

By: Jeff Sommer
New York Times, June 30, 2002

 Investors kept pouring money into mutual funds in their retirement accounts last year, but the accounts lost value anyway, almost entirely because of the drop in the stock market.

A new report on retirement accounts by the Investment Company Institute, the mutual fund trade group, said net cash flow into mutual funds in the accounts actually increased 18 percent in 2001, to $140 billion, the third-highest inflow on record.

But over all, the accounts lost 4 percent of their value. "The decline in retirement mutual fund assets occurred entirely in the category of equity funds, reflecting widespread weakness in stock prices," the institute said.

The report covered all forms of retirement accounts, and said the trends were similar in all of them. Total mutual fund holdings in individual retirement accounts, for example, fell by 5 percent, because of stock mutual fund losses.

Declining stock prices have continued this year, of course, but the institute's data did not extend into 2002.


The Wall St. Worries of the Rich

 A new survey has found that most affluent Americans are worried about corporate accounting, the reliability of Wall Street stock analysts and the possible economic effects of another terror attack.

But despite declines in the value of their portfolios, they are not making any major changes in their investments, according to the survey, by the U.S. Trust Corporation.

Their largest investment holding continued to be stocks, comprising 33 percent of the value of their portfolios, compared with 37 percent in 2001. They continued to save an average of 22 percent of their after-tax income.

The survey was aimed at the wealthiest 1 percent of the population, which the company defined as households with an annual income of at least $300,000 or net worth of $3.75 million.

The telephone poll of 150 people was based on a random sampling and has statistical reliability of plus or minus six percent, according to U.S. Trust.

30-Year Low for Money Markets

 People who have parked cash in money market accounts received as low a return on their money last week as at any time in the last 30 years.

The average yield on money-market fell to 1.31 percent last week, tying a three-decade low, according to by iMoneyNet Inc. of Westborough, Mass.

Money market rates are affected by short-term rates set by the Federal Reserve, which are at the lowest levels in 40 years.

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