Building Dynamic Portfolios Searching the Globe Delivering Objective Strategies

Fund Architects Blog

Fund Flows

Wednesday, January 23, 2013

The US mutual fund industry recorded impressive net inflows in 2012 raking in more than $243 billion, according to Morningstar. US Stock classified funds recorded a whopping $119 billion outflow for the year while bond categories were positive, including a net $262 billion inflow. This trend has been in place since 2007-2008, during which time the assets in taxable bond category have swelled from $1.1 trillion to $2.5 trillion. Despite the nasty outflow trend in US stock funds, this category still claims $3.4 trillion of assets. All long-term funds, excluding money market, sum to nearly $9.3.

It will be interesting to watch if the long-term trend of flows into bonds and out of US Large Cap stock categories continues. Bond yields in general are very low and many pundits do not believe there is much room for further price increases. Stocks relative to bonds appear to be better bargains according to some measures such as the S&P 500 earnings yield minus the yield on 10-year US Treasuries. Somewhat surprising recently was the reporting of positive flows into stock funds for the first couple of weeks in January, according to Lipper. This news created a little excitement to market followers, especially those more reliant on equities to earn a living.

So we will stay tuned to fund flows to see if this development is the beginning of a change in trends or merely a blip in the longer-term theme of bond category domination.

The remarks and observations stated here represent the views and opinions of Fund Architects, LLC, and are not intended to be construed as investment advice. Fund Architects is not responsible for any actions taken as a result of these comments. No form of compensation is received for the contents of this blog.

FABLOG-34

-->

Fund Flows

Monday, October 28, 2013

International mutual funds are receiving strong flows this year relative to other categories, according to information from Morningstar. The international equity category had the largest inflows of all categories for the month of September and for the year-to-date period. The foreign large-blend, world-stock, and diversified emerging-markets categories each have had strong flows, although flows to diversified emerging markets are off of their rapid pace from earlier in the year.

Economic data from Europe has stabilized and growth is actually now being attained across the broad union. Valuations of international equities seem to be a bit more persuasive than domestic counterparts. Performance by international equity indices has also been relatively good. These dynamics are likely leading investors to send their investment dollars to international mutual funds.

Fund flows are an interesting data point to gauge investor behavior and one worthy of keeping an eye on.

The remarks and observations stated here represent the views and opinions of Fund Architects, LLC, and are not intended to be construed as investment advice. Fund Architects is not responsible for any actions taken as a result of these comments. No form of compensation is received for the contents of this blog.

FABLOG-67
-->