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The Markets August 13, 2012
Investors Continued to Seek Safety in July
The search
for safety led to bond fund demand across a spectrum of corporate and U.S.
government funds, high and low credit quality, and global bond strategies.
Reported by Rebecca Moore
In total, U.S. stock and bond mutual funds (open-end and closed-end mutual funds, excluding exchange-traded funds [ETFs] and funds underlying variable annuities) posted a net inflow of $17 billion for July, with bond funds garnering $30 billion in new investments.
Year-to-date through July-end, bond fund flows neared $180 billion, more than 50% above full-year results for 2011, according to Strategic Insight, an Asset International company. Contrasting the interest in bond funds, U.S. equity funds registered another month of net redemptions in July increasing to $13 billion, while international equity funds benefited from small positive inflows of $1 billion.
“Investors continue to dismiss the positive trends reflected in steady gains in the economy, employment, real estate prices and the potential for capital appreciation through higher allocation to stock funds. Instead, investors stay very focused on capital preservation for the near term,” said Avi Nachmany, SI’s director of research.
Separately, SI reported, U.S. ETFs enjoyed $14 billion in net inflows this July, another very strong month, mostly through stock exchange-traded products (ETPs). That brought total ETF net inflows (including (exchange-traded notes) ETNs) to nearly $90 billion so far in 2012.