Mutual fund sales fall to 3-year low

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Net sales of mutual fund shares dropped to the lowest point in the three years 2003-2005, with net sales of $257.5 billion.

See: Federal Reserve flow of funds account F 214.

Mutual fund sales drop

Net sales of mutual funds fell almost 14% from 2004 to 2005.

Of net mutual fund sales, the amounts invested in corporate equity fell from 52.7% in 2004 to 49.9% in 2005.

See: Federal Reserve flow of funds account F 122.

The drop in mutual fund sales helps explain why stock buybacks became less effective in 2005.

Weak fund sales in combination with historical over-valuation of stocks and the impending retirement of baby boomers, are a portent of weakness in the US equity market.