Fund Inflows Still Strong in September

U.S. stock funds saw a net outflow of $3.1 billion, while international stock funds posted a net $3.8 billion inflow. Taxable bond funds received the bulk of the inflows at $35.5 billion, the data showed.

The Morningstar Direct Fund Flows commentary said the third quarter proved to be a big comeback month for inflows into U.S. open-end mutual funds. During the three-month period, investors contributed $144.7 billion to funds, taking the year-to-date total to $273.2 billion. Meanwhile, $188.2 billion exited U.S. money market funds.

The outflows for U.S. stock funds in September can largely be attributed to American Funds, according to Morningstar. In total, investors pulled $1.8 billion out of American Funds in September, and year-to-date through September the firm has registered outflows of $19.3 billion, while the other major firms had inflows.

Morningstar said Vanguard has solidified its place atop the U.S. fund charts, but the Vanguard 500 Fund was the least popular U.S. fund in September, with outflows of $631 million.

ETF Flows

The exchange-traded fund (ETF) industry broke through another barrier in September, as industrywide assets under management topped $700 billion, compared with about $670 billion in assets under management at August month-end, according to Morningstar data. Investors poured roughly $5.4 billion into U.S. ETFs in September, bringing the year-to-date total to approximately $56.3 billion in net new inflows.

ETF industry flows have been quite strong so far in 2009, with positive flows in every month except February, when investors yanked roughly $5.5 billion out of ETFs.

The Morningstar Direct Fund Flow commentary said that among the broad asset classes, taxable-bond ETFs attracted the most new assets in September, raking in about $3.2 billion in net inflows, bringing total assets under management in taxable-bond ETFs to about $85.2 billion.

The shift into fixed-income ETFs has been an ongoing theme thus far in 2009, as year-to-date the category has brought in about $26.7 billion of new assets, which makes it the most popular ETF category so far in 2009.

In addition, Morningstar said investors' heightened interest in the bond market—particularly for the shorter end of the yield curve—has resulted in increased product development from various ETF sponsors. There have been 17 new fixed-income products launched this year (with several more filings still in registration with the SEC).

Investors have also been pouring into commodity ETFs. After seeing more than $1.4 billion flow into the category in September, commodity ETFs' year-to-date total net inflows have reached $21.4 billion. Net inflows thus far in 2009 represent about one third of the category's total $63 billion in total net assets, as of September 30.