Investing February 14, 2011

Funds Had Strong January Showing

February 14, 2011 (PLANSPONSOR.com) – Long-term mutual funds roared back in January with nearly $30 billion in estimated inflows, according to Morningstar’s latest data.
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A Morningstar news release said the January showing reversed December’s $10.6-billion outflow. U.S. stock funds led the surge with nearly $16 billion in inflows, with U.S. stock exchange-traded funds collecting another $10 billion. This is the biggest haul for open-end U.S. stock funds since February 2006 and the best January since 2004, Morningstar said. It also reverses eight consecutive months of outflows.

Conversely, nearly $76 billion fled money market funds, the majority of which left taxable funds. This was the largest money market exodus since April 2010, according to Morningstar. The municipal-bond retreat continued with about $12.5 billion in outflows, slightly less than last month’s record $13.4 billion in redemptions.

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Other highlights from the Morningstar report include that: 

  • Taxable-bond funds took in $10.7 billion in January after losing $4.5 billion in December, and credit-oriented categories, led by bank-loan funds, dominated inflows to the asset class. Bank-loan funds gathered assets of $5.6 billion in January to set a second consecutive monthly inflow record and mark the six consecutive month-over-month increase. 
  • Among U.S. equity funds, actively managed funds claimed greater inflows, $10 billion, than passively managed funds, with $5.8 billion, for the first time since May 2009, and January was the fourth month during which active funds have outdrawn passive funds over the past three years.

The Morningstar data is at http://corporate.morningstar.com/us/documents/FundFlows/FundFlowsFeb2011.pdf.

Investing February 14, 2011

US ETF Assets up to $1T

February 14, 2011 (PLANSPONSOR.com) – Having broken the $1 trillion milestone in December, many questioned whether inflows into U.S. ETFs had become overheated, according to Morningstar.
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Though U.S. ETF net assets under management were up slightly month over month, settling at $1.02 trillion by the end of January, flows tempered their pace. Total net flows fell to just over $11 billion from $18 billion during the first month of the year.

Although U.S. stock ETFs drove inflows in January for ETFs overall, inflows for the asset class were down nearly 50% month over month, according to Morningstar data. U.S. stock ETFs saw inflows of $9.9 billion in January, compared to $17.2 billion in December.

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Commodities ETFs lost $1.7 billion in January to lead outflows among the ETF asset classes, and precious metals ETFs were responsible for the majority of these redemptions. However, several futures-based broad agricultural commodities funds saw inflows.

After outflows in December, taxable-bond ETFs took in approximately $2.9 billion in January to mark the month’s second-highest inflows by asset class, behind U.S. stock ETFs.

International-stock ETFs, which had the second-highest inflows in 2010 among the ETF asset classes, saw modest outflows of $491 million in January.

The Morningstar data is at http://corporate.morningstar.com/us/documents/FundFlows/FundFlowsFeb2011.pdf.

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