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Rating:Stock and Bond Funds Expand by $1T Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, November 23, 2012

Stock and Bond Funds Expand by $1T

Reported by Tommy Fernandez

Stock and bond fund investors have enjoyed in 2012 more than $1 trillion in asset appreciation, according to Strategic Insight.

The AUM growth was boosted by strong stock fund total returns (averaging over 12 percent through October-end) and bond fund total returns (averaging nearly 8 percent in the same period), according to the company.

Moreover, asset appreciation, as well as net inflows to bond and stock funds (including ETF flows) projected to near or exceed $400 billion for all of 2012, could make 2012 a near-record year for expansion in asset under management for the U.S. mutual fund industry (second to 2009 when asset gains jumped $2 trillion from a depressed level as markets rebounded strongly).




Company Press Release

More than $1 Trillion of Capital Appreciation for Stock and Bond Funds in 2012 So Far



More than $1 Trillion of Capital Appreciation for Stock and Bond Funds in 2012 So Far Long-Term Mutual Funds Net Monthly Inflows of $15B in October NEW YORK, NY – November 14, 2012 – Stock and bond fund investors have enjoyed in 2012 more than $1 trillion in asset appreciation, helped by strong stock fund total returns (averaging over 12% through October-end) and bond fund total returns (averaging nearly 8% in the same period).

Asset appreciation, as well as net inflows to bond and stock funds (including ETF flows) projected to near or exceed $400 billion for all of 2012, could make 2012 a near-record year for expansion in asset under management for the U.S. mutual fund industry (second to 2009 when asset gains jumped $2 trillion from a depressed level as markets rebounded strongly).

“So far, 2012 shapes as one of the best year ever for wealth creation for mutual fund investors. Next year, assuming meaningful progress is accomplished in Washington, could similarly surprise many of the doom Sayers,” commented Avi Nachmany, SI’s Director of Research.

“In 2013 most investors would continue to focus on income and stability. Yet, as economic life across America slowly improves, investment in stock funds will increase too. With 80-90% of all stock fund balances dedicated to retirement savings, thus having accumulation and withdrawals’ time-horizons of 20, 30, or 40 years for most investors, once Americans become more confident about the future, investing for retirement in that more optimistic future through stock mutual funds will expand,” added Mr. Nachmany.

In October, net inflows to bond funds reached $30 billion; bond funds are projected to amass over $300 billion in net inflows for the full year, exceeding 2010 and 2011 pace, according to Strategic Insight, a business intelligence provider to the fund industry. (Flow data in open-end mutual funds, excluding ETFs and funds underlying variable annuities.)

Ahead of the election, tax, and fiscal uncertainties, stock fund investors remained on the side line in October. Equity fund net redemption were $15 billion. (ETFs investing in stocks experienced also modest redemptions of $2 billion in October, following inflows of $38 billion during September, their highest monthly take in four years. More ETF observations are discussed below.)

Target date funds attracted $5 billion in net flows during October, increasing YTD net intake to $45 billion. “This year target date products are on track to rival the annual net flows record set in 2007 of $58 billion,” said Bridget Bearden, head of Strategic Insight’s Defined Contribution and Target Date funds practice.

Money-market funds moved into net redemptions during the month of $8 billion, bringing redemptions in such funds to nearly $144 billion so far in 2012.

ETFs: Exchange-traded products benefitted from $3 billion of October net intake, bringing total ETF net inflows (including ETNs) to nearly $140 billion for the first ten months of 2012, already exceeding the full-year gain in each of the past three years. Outside the U.S. ETFs gained $45 billion so far in 2012. Thus, globally ETF net flows in 2012 should exceed $200 billion. Gold, Emerging Markets, Diversified International and Corporate bond funds were among the many objectives gaining inflows, while a number of domestic growth-oriented funds faced monthly net redemptions.
 

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