Investing May 28, 2003

MSCI Hedge Fund Index Up 1.94% in April

May 28, 2003 (PLANSPONSOR.com) - Reversing course from the negative returns seen in March, final numbers reveal the MSCI Hedge Fund Index returned to its winning ways in April.
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April’s 1.94% gain was a marked turnaround from March’s 0.47% loss (See  MSCI Hedge Fund Index Slides 0.47% in March ) and the final numbers were very close to preliminary results released earlier this month (See  MSCI Hedge Fund Index Finds Joy In April ).   Of note, all the Index’s process groups were in positive territory for the month, according to a MSCI news release.

Components

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April’s largest process group gainer was Specialist Credit, up 2.66%.  Specialist Credit, those funds that seek to lend to credit-sensitive issuers, was likewise buoyed by returns in Distressed Securities, which gained 4.00%.

Likewise, gains were seen in Security Selection and Multi-Process Group.     Security Selection Index, those managers who combine long positions and short sales with the aim of benefiting from their ability in selecting investments while offsetting systematic market risks, ended the month 2.60% higher.   Multi-Process Group funds, strategies that focus on spread relationships between pricing components of financial assets or commodities, was the third best performing process group for April with a 2.36% return. 

The other two categories Directional Trading and Relative Value were up 1.21% and 0.94%, respectively.  

Taken another way, and broken down by asset class, April’s top performer was the MSCI Hedge Fund Fixed Income Index, which gained 2.22%.  This performance was followed by the MSCI Hedge Fund Equity Index gaining 2.15%, while the MSCI Hedge Fund Diversified Index was up 1.35%.

Overall though, the index’s performance was much lower than the MSCI World Equity Index, up 8.64%.   For the year, the index is up 3.68%, outperforming its World counterpart, which is up 2.66%.

The MSCI Hedge Fund Indices are composed of more than 160 indices. More than 1,700 hedge funds have agreed to participate in the database and there are over 1,400 hedge funds currently in the MSCI Hedge Fund Indices and Database.

Investing May 27, 2003

FRC: Funds Net $24.7 Billion Net April Inflow

May 27, 2003 (PLANSPONSOR.com) - Mutual funds continued to pick up assets in April, recording net inflows of $24.7 billion for the month.
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Domestic equities led the way by taking in $12.2 billion, while corporate bond funds built on a strong March, taking in an additional $8.9 billion for the month, both totals significantly higher than the $2.1 billion and $7.8 billion, respectively, that flowed into the categories in March (See FRC: Funds Net $11.8 Billion March Inflow ).  Other inflows were also recorded in international global bond funds and government bond funds, amassing $3.5 billion and $582 million, respectively in April, according to a Financial Research Corporate (FRC) report.

Tax-free bonds funds could not hold on to the positive inflows recorded in March, suffering a net outflow of $437 million.  Year-to-date, all categories have registered net inflows:  corporate bonds ($32.2 billion), government bonds ($14.0 billion), domestic equity ($9.3 billion), international/global bonds ($5.6 billion) and tax-free ($1.6 billion).

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In terms of Morningstar fund categories, high yield bond funds still ruled the roost, accumulating $5.5 billionf for the month.  Still, bonds no longer dominatd the flow charts, according to FRC.  In terms of net flows, domestic hybrid funds grew by $3.0 billion, followed by:

  • Foreign stock – $2.5 billion
  • Large Growth – $2.0billion
  • Large Blend – $1.9 billion

Family Affair

Falling into the same rank as the previous month, the Vanguard Group and Fidelity Investments were once again head of the class in terms of total assets, with $499 billion and $488 billion, respectively.  Behind the two sizeable fund families in the total asset race were:

  • American Funds – $349 billion
  • Franklin Distributors Inc – $154 billion
  • Putnam Investments – $132 billion

However, the order got shuffled in April’s best-sellers list.   American Funds held this month’s top stop, recording net flows of $5.1 billion, with last month’s number one, Vanguard Group, falling back to second gaining $3.0 billion.  Rounding out the top five in monthly net inflows were:

  • PIMCO Funds – $2.6 billion
  • Fidelity Distributors  – $2.4 billion
  • T. Rowe Price Investment Services – $903 million

Year-to-date, the list top five list was similarly rearranged. Even though American Funds held on to the top after $14.0 billion in net flow, Vanguard assumed the number two spot with $10.8 billion, followed very closely behind by March’s number two PIMCO, obtaining $10.7 billion thus far in 2003.  Number four and five also switch places to finish out the top five as Fidelity Distributors and Dodge & Cox gained $4.8 billion and $3.4 billion in year-to-date net inflows, respectively.

Individual Performance

Dislodging the Vanguard Total Stock Index from the top spot in April’s net flows was American Funds Growth Fund, with $926 million.  American Funds also held the next two spots, with the Cap Inc Bldr fund recording $786 million and the Inc Fund posting $631 million. PIMCO’s High Yield and Total Return, collecting $619 million and $618 million, respectively, held the fourth and fifth spots.

Excluded from the report is all data from money market funds.

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