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The Markets September 14, 2010
Equity Outflows Continue in August
Long-term fund flows increased by more than 11% in August versus July, and once again the lion's share went to fixed-income funds, according to the Morningstar Direct Fund Flows Update.
Reported by Rebecca Moore
Taxable bond funds attracted $24.6 billion in new money for the month, and municipal bond funds took in another $5.2 billion. Taxable bond funds have now taken in $168.4 billion for the year to date. Alternative strategies took in $3.1 billion in August.
Intermediate-term bond funds dominated once again, taking in nearly $11.1 billion for the month, with multisector bond and world bond funds coming in a distant second and third ($3 billion and $2.7 billion, respectively). Emerging markets bond funds remain popular, with $1.1 billion in inflows. Category assets have now reached $32 billion versus $15 billion 12 months ago.
On the other hand, even though the long-term bond and long government categories have enjoyed strong returns, inflows remain modest, Morningstar said. These two categories absorbed $191 million and $157 million last month, respectively.
Meanwhile, the relentless outflows continued for U.S. Stock funds, as another $14.3 billion headed for the exits. During the past four months alone, these funds have lost a combined $48.9 billion.
Large-growth and large-value funds are taking the brunt of investor discontent. These two categories surrendered nearly $8.6 billion in August and a combined $38.3 billion for the year to date, according to Morningstar data.
After enduring mostly outflows since early 2009, money market funds took in $11.8 billion in August. Taxable money market funds collected more than $18.5 billion during the month, while tax-free funds saw $6.7 billion in outflows.
PIMCO continues to lead the fund sales chart, taking in $7.7 billion in August, thanks to PIMCO Total Return’s robust $5.2 billion haul. PIMCO Fundamental Advantage Total Return and PIMCO Unconstrained Bond took in about $1 billion each.
Vanguard posted inflows of $4 billion for the month. Total Stock Market and Total Bond Market continued to be the most popular offerings.
On the other end of the spectrum, American Funds continued to bleed money, with nearly $5.5 billion walking out the door. Growth Fund of America absorbed the worst hit, seeing $1.6 billion in outflows. Fidelity also continues to suffer, with nearly $1.6 billion in outflows for the month.