Stock and bond mutual fund inflows in the U.S. totaled about $35 billion in January, an about-face from the $24 billion in redemptions in long-term funds seen in December, according to Strategic Insight, a business intelligence provider to the fund industry and sister company of Global Custodian.
It was the best month for net inflows in long-term mutual funds since April 2010, when stock and bond funds (excluding ETFs and VA funds) added $44 billion in total net inflows, Strategic Insight says.
Flows were flat for domestic equity funds in January, but that was an improvement on the net outflows seen every month since April last year.
Taxable bond funds had inflows of $26 billion in January, of which $7 billion were corporate bond funds and $6 billion were corporate high-yield bonds. Muni bonds had net inflows of $6 billion.
Money-market funds fared less well with net outflows of $44 billion in January. Investors no longer treated money market funds with the safe haven status that had resulted in December net inflows of $37 billion, Strategic Insight said in a statement.
Despite the upturn in the U.S. stock market, most equity investors are still on the sidelines due to uncertainty, says Avi Nachmany, Stragic Insights director of research. A robust increase in optimism and risk appetite would have translated into substantial net inflows to U.S. equity funds, similar to the $21 billion in net inflows to domestic equity funds we saw in January 2011. What we saw this January was the effect of new-year portfolio rebalancing coupled with an easing of the volatility fatigue that has affected investors since the summer. Januarys flows may be something to build on if we see continued recovery in the economy and stock market.
Separately, Strategic Insight says the U.S. exchange-traded fund industry added $28 billion in January, the best month for inflows since September 2010, when it also added $28 billion. Total U.S. ETF assets stood at $1.15 trillion at the end of January, a record high.
(CG)