A record month for inflows into stock mutual funds and exchange-traded funds, and people are declaring the retail investor is back. But is that return for real? One well known mutual fund industry group says no, at least not yet.
"Weekly flows mean little," said Shelly Antoniewicz, senior economist at the Investment Company Institute. "You need to see flow increases over a five -to- six month period."
The small investor has been largely absent in the Dow's five year journey back to 14,000. In January though, an eye-catching and record $77.4 billion was invested in stock mutual funds and ETF's. (Read More: Inside the Complex World of Computer-Driven Stock Trading)
Of that $77.4 billion, a record $39 billion went into domestic equity funds and domestic equity ETFs. This is seen as a bullish sign for many, as the retail investor usually joins in on the last leg of a race to new record highs. In its report TrimTabs noted while there is no way to know what drives flows at any one time, it believes "the biggest factor is simply investors are becoming more upbeat." (Read More: Sucker Alert? Insider Selling Surges After Dow 14,000)
ICI sees things differently. Antoniewicz pointed out January is historically a strong month for inflows as investors make their annual contributions to IRAs and year-end bonuses are invested. This year, fund inflows got another leg up from investors deploying cash raised from selling investments at year end, to avoid paying higher taxes in the New Year, she said. This suggested a bulge in the fund inflows that may not be sustained, a theory supported by the weekly fund flow data from ICI.
Net inflows into domestic equity mutual funds fell 54 percent from over $7.7 billion in the week ended January 9, to $3.4 billion in the week ended January 23, suggesting the New Year's surge is fading fast.
A better read on retail interest in the stock market would be sustained inflows into equity funds and ETFs, said Antoniewicz. She noted if you see inflows remain strong through the first quarter and into April, you could make a better case for the retail investor's being back.
Still, the retail investor, or at least mutual fund flows, may be becoming less of a factor in driving the stock market to new heights.
"When the markets rise we typically see mutual fund flows rise," said Antoniewicz. "That said we've seen a weakening of that relationship over the last three or four years." (Read more: Why This Market Correction May Have a Way to Go)
She cited a number of reasons for this disconnect between fund flows and market performance. First, as Baby Boomers age, they put less money at risk and therefore less money in the stock market. (Read More: Well-Off Show 'Worrisome Disconnect' on Retirement)
Second, perhaps reflecting investors recent experiences with stock market booms and busts, there is a trend toward more diversified portfolios and funds that are not pure play stock funds. Lastly, mutual funds are no longer the only way to gauge the interest of the retail investor as more of them are using alternative investments like ETFs or exchange traded funds.
—By CNBC's Mary Thompson; Follow her on Twitter: @MThompsonCNBC