Equity mutual funds are burning through cash at the fastest rate in 18 years, leaving them with the smallest reserves since 2007 in a sign that gains for the Standard & Poor's 500 Index may slow. Cash dropped to 3.6% of assets from 5.7% in January 2009, leaving managers with $172 billion in the quickest decrease since 1991, Investment Company Institute data show. The last time stock managers held such a small proportion was September 2007, a month before the S&P 500 began a 57% drop, according to data compiled by Bloomberg. For Parnassus Investments and Janney Montgomery Scott LLC, depleted reserves is a sign returns will fall from last year, when the S&P 500 rose 23%, the most since 2003. Bulls say any pullback is a buying opportunity because investors have $3.17 trillion in money-market funds and may return to stocks after putting 16 times more money into bonds since last March. Investors are trying to gauge how much money is left to move shares after the S&P 500 surged 70 percent in the 10 months starting in March 2009, and then began an 8.1% slide on Jan. 19. The drop, which matches the average size of 117 "moderate corrections" tracked by Birinyi Associates Inc. since 1945, may herald a second phase of the bull market after last year's advance surpassed every rally since the 1930s.- Bloomberg News.
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