The Markets October 31, 2008

Q208 Sees Slight Fund Asset Drop-Off

Mutual fund assets worldwide decreased 0.7% to $24.64 trillion at the end of the second quarter of 2008, according to Investment Company Institute (ICI) data.
Reported by

An ICI news release said on balance, net cash flow to all funds was close to zero in the second quarter, as net flows out of money market funds nearly completely offset net flows into long-term funds, according to ICI.

Long-term funds had net inflows of $72 billion in the second quarter, partially reversing net outflows of $92 billion in the prior quarter. The reversal was due to strengthening net flows into equity funds and balanced/mixed funds, which combined had net inflows of $43 billion in the second quarter, compared to net outflows of $147 billion in the first quarter.

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Notably, after 12 consecutive quarters with positive net flows, money market fund flows turned to the downside in the second quarter, ICI said. Money market funds experienced net outflows of $70 billion in the second quarter, compared with inflows of $486 billion in the previous quarter of 2008 and inflows of $800 billion for the year in 2007.

Net cash flow into mutual funds worldwide was $2 billion in the second quarter of 2008, with net outflows from money market funds nearly offsetting the net inflows into long-term funds. Net inflows into equity funds worldwide were $28 billion in the second quarter, compared to a net outflow of $132 billion in the first quarter of 2008.

The Americas registered net inflows of $35 billion into equity funds in the second quarter, compared to a net outflow of $47 billion in the first quarter. The pace of net outflows from European equity funds slackened in the second quarter, with $24 billion in outflows compared to $115 billion in the first quarter, ICI said. Flows to equity funds in the Asia/Pacific region slowed but remained positive, dropping to $16 billion in the second quarter compared to $31 billion in the first quarter.

Bond funds experienced $14 billion in net inflows in the second quarter of 2008, compared to net inflows of $13 billion in the first quarter of 2008. Net inflows to bond funds were $38 billion in the Americas in the second quarter, down from $79 billion in the first quarter. Net outflows from bond funds were $39 billion in Europe in the second quarter, compared to net outflows of $59 billion in the first quarter.

More information is available here.

See also: “Funds See September Asset Drop“

The Markets October 31, 2008

September Fund Outflows Exceed $21B

Stock and bond funds experienced net outflows of $21.9 billion in September, according to data from the Financial Research Corporation (FRC).
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International/Global Equity funds saw the biggest net outflow of $27.6 billion, followed by Corporate Bond funds with a net outflow of $11 billion. Only Domestic Equity and Government Bond funds experienced net inflows in September of $12.8 billion and $7.3 billion, respectively, FRC data show.

By Morningstar category, Large Blend funds saw a $13.7 billion intake—well above numbers two and three, Small Blend ($5 billion), and Intermediate Government ($4 billion) funds.

State Street Global Advisors SPDR S&P 500 ETF was by far the best-selling fund for the month, with an intake of $20.1 billion. Barclays Global Investors iShares Russell 2000 Index fund came in a distant second, attracting $6.3 billion for the month.

More information is available at www.frcnet.com.

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