RECORD flows of cash are pouring into mutual funds as US stocks continue their record breaking run, but money managers may find that like last year, meeting or beating the averages will be difficult in 1996.
The Investment Company Institute trade group said the estimated net flow to equity funds in January was 524.5 billion which would beat the previous record flow of $18.4 billion hit in January 1994.
The Dow Jones industrial average has risen 8 per cent this year and the Standard & Poor's index of 500 stocks is up nearly 4 per cent. The Nasdaq index has gained nearly 7 per cent after lagging the Dow during the early part of the year.
"It really is a big cap index market and the indexes are out performing the rest of the market. For people in the broad market, they are not going to do as well," said Mr Michael Metz, chief market strategist at Oppenheimer & Co.
Mr Peter Canelo, chief investment strategist at NatWest Securities, expects stocks to keep rising, gaining 15 per cent to 20 per cent year on year to bring the Dow above 6,000 points.
However, analysts - agree that stocks are likely to run into periods of heavy selling, giving stock pickers a chance to navigate through the rough times and perhaps come out winners.
"Last year the big move was in the Dow industrials and those funds that focus on the Dow did just fine. But with a choppier, more selective market, the fund manager has an opportunity to do better," said Mr Alfred Goldman, technical analyst at A.G. Edwards and Sons. "It is and is going to remain a stock pickers market."
