The Markets March 13, 2012

Mutual Funds Record Strong February Inflows

Open-end mutual funds had their strongest long-term flows in nearly two years with an estimated $44 billion in February inflows.
Reported by

According to Morningstar, taxable-bond funds were once again the winner with more than $28 billion in inflows, the most since March 2010. Municipal-bond funds continued their return to normality with more than $6 billion in inflows, which is close to the long-term baseline.   

Outflows continued for U.S.-stock funds with $1.2 billion walking out the door. However, this was the smallest net outflow in 10 months. International stocks fared better with $3.3 billion in inflows, but again, largely reflected interest in emerging-markets funds. Despite the government’s efforts to drain assets from money market funds via a zero interest-rate policy, that group actually saw its outflows drop dramatically to $3.7 billion from $38 billion in January. 

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Taxable-bond funds have dominated mutual fund inflows for years, but the cumulative effect is staggering, Morningstar said. Taxable-bond assets have more than doubled in the little more than three years since the end of 2008, increasing to $2.1 trillion from $1.0 trillion. During that time, the group’s share of overall mutual fund assets has grown to 25.0% from 20.6%. That growth has been fueled by about $680 billion in inflows.   

Meanwhile, about $200 billion has fled U.S.-stock funds, despite the fact that the S&P 500 Index’s return during that time was about three times the gain on the Barclays Capital U.S. Aggregate Index. Intermediate-term bond funds have led the way throughout. The category collected $14 billion in February, which accounted for half the asset class’ haul. Over the past 12 months, the category’s nearly $61 billion in inflows represents more than one third of taxable bond’s nearly $160 billion total.  

Passively managed U.S.-stock funds continue to attract money at the expense of their actively managed brethren. While actively managed funds have suffered outflows of $134.4 billion over the last 12 months, passively managed funds have collected about $20.1 billion in new assets.  

To view the complete report, visit http://www.global.morningstar.com/febflows12. 

Deals & People March 13, 2012

Schwab Hires Carney to Head Retail Branch Network

Jeffrey Carney will head Charles Schwab’s retail branch network.
Reported by

A spokesman from Schwab told PLANADVISER Carney will start at the end of March and will report to Andy Gill, executive vice president and co-head of Schwab Investor Services.

Carney comes to Schwab from Putnam Investments, where he served as senior managing director and head of global marketing and products.  (see “Fidelity Alum Carney Joins Reynolds at Putnam”). Prior to this, he was president of Bank of America Retirement and Global Wealth & Investment Management Client Solutions.

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Before joining Bank of America, Carney was president of Fidelity Retirement Services. Prior to this role, he served as president of Fidelity Personal Investments since 2002. He joined Fidelity in April 2001 as president of Fidelity Investments Canada.

Carney is a graduate of Queens University in Kingston, Ontario. 

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