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Monday, May 20, 2013

Funds See "Two Great Rotations"

Reported by Neil Anderson, Managing Editor

$175 billion and counting. That's how much net money has flowed into equity mutual funds and ETFs in 2013, as of April 30.

According to Strategic Insight, those equity inflows are triple those of the first four months of 2012. When you add in bond fund and ETF inflows, the total for January through April 2013 rises to $293 billion, up 50 percent year-over-year.

"Overall we observe two great rotations in the mutual fund industry (not just one)," stated Avi Nachmany, director of research at Strategic Insight. "One, from $10 trillion+ zero-yield cash to other income vehicles, mostly bond funds. Another, from un-invested money to capital appreciation vehicles, as investors re-engage and move up their personal risk curve."

See Strategic Insight's full April fund flows release below:


Company Press Release


April Mutual Fund Flows: Slowing but Still Near $50 Billion

Equity Funds Triple Last Year’s Pace during 2013’ First Four Months

    NEW YORK, NY – May 13, 2013 – After a record-setting first quarter, stock and bond funds maintained a strong pace of net inflows during April, netting nearly $50 billion (including ETFs),  according to Strategic Insight, a mutual fund industry research and business intelligence provider.  

The first four months of 2013 attracted $293 billion of net intake in total for stock and bond funds and ETFs, roughly 50% more than net flows experienced during the same period last year. Equity funds specifically have attracted $175 billion through April, three times the pace experienced in 2012.  

  “Overall, we observe two great rotations in the mutual fund industry (not just one). One, from $10 trillion+ zero-yield cash to other income vehicles, mostly bond funds. Another, from un-invested money to capital appreciation vehicles, as investors re-engage and move up their personal risk curve,” commented Avi Nachmany, SI’s Director of Research. “Both trends are likely to continue.”  

  “While spiking stock prices explains some of the hesitation among some stock fund investors lately, dollar-cost averaging remains an attractive long-term strategy,” added Mr. Nachmany. “Indeed, as time horizons of most stock investors saving for retirements are measured in decades not months, it is reassuring to observe that since early 2000, stock fund investors earned over $2 trillion in profits, during years of bubbles, price collapse, recessions, and recoveries.”  

  Stock and bond funds attracted $39 billion in April, bringing year-to-date total to $232 billion. US Equity funds attracted flows of $9 billion in April, bringing annual intake thus far to $58 billion, a significant turnaround from the anxiety that plagued stock funds since 2008.   

  Lifecycle funds grow to $784 billion  

Lifecycle mutual funds (target date and target risk) assets grew to $784 billion in April. Target date mutual fund assets accounted for $538 billion and netted $28 billion of net flows during the first four months of 2013.  

  Mutual fund share classes designated specifically for defined contribution retirement plans (often referred to as R-shares) grew to $596 billion across strategies. “As 401(k) plans and other defined contribution plans cement themselves as the default retirement savings vehicle for most Americans, product providers’ focus on distributing to these plans has become more pronounced,” said Bridget Bearden, head of SI’s defined contribution research.  

  ETFs: Exchange-traded products (including ETNs) attracted $8 billion of net intake in April. Stock-oriented products accounted for $1 billion of ETP inflows (inflows elsewhere were matched by net redemption among Gold and emerging market ETFs), while taxable bond ETPs attracted $7 billion of monthly net flows.   

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For more than 20 years, Strategic Insight has been at the forefront of thorough, unbiased mutual fund industry research and business intelligence. We provide our variety of products and services to a range of clients, including executives from more than 200 investment management and insurance companies, distributors, investment banks, hedge funds, consultants and law firms. Strategic Insight’s parent company, Asset International, delivers critical, cutting edge data, research and marketing programs to mutual fund companies, banks, asset managers and insurance companies worldwide. The company has offices in New York, Boston, Hong Kong, London, Melbourne, Toronto, and Stamford, CT. For additional information, visit www.SIonline.com.
 

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