Mutual Funds See Modest Inflows in May

That was a drop from the $24.5 billion in net inflows to stock and bond funds in April. May’s numbers also marked the lowest volume of positive net flows since long-term mutual funds experienced net outflows in December 2011, according to Strategic Insight, an Asset International company.  

In May, domestic equity funds saw net outflows of nearly $5 billion, during a month of poor stock returns: the average U.S. stock mutual fund lost 4.2% in the month, on an asset-weighted basis. That brought total U.S. equity fund flows to -$7.4 billion for the first five months of 2012—a sharp reversal from the same period a year ago, when U.S. equity funds enjoyed cumulative net inflows of $40 billion.   

International/Global equity funds posted net inflows of $5 billion in May, but that was down from the $6.5 billion they took in the previous month. In the first five months of 2012, international equity funds drew aggregate net inflows of $27.6 billion.

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Taxable bond funds saw net inflows of $9 billion in May, the smallest amount of net inflows they have experienced since they attracted just over $8 billion in December 2011. Investors continued to use bond funds as income-producing solutions amid extremely low rates. Short- and intermediate-maturity bond funds were the most popular types of mutual funds in May, leading the way with nearly $6 billion in combined net inflows. Emerging market bond and global bond funds followed in popularity.   

Taxable bond funds have drawn an estimated $110 billion in the first five months of 2012, far ahead of the $80 billion in net flows that taxable bond funds took in over the course of 2011’s first five months.  

Meanwhile, munciplei bond funds saw net inflows of $5 billion in May. Muni bond funds drew $24 billion in net inflows through the first five months of the year, as long-term muni bond issuance has risen substantially from year-earlier levels.   

Money-market funds saw net outflows of $2 billion in May, which was an improvement over April’s net outflows of $22 billion. Ultra-low yields continued to hamper demand for money market funds even as more investors turned to them as a safe haven.    

More information about Strategic Insight is available here.