Investors in US stock mutual funds added modestly to their portfolios during January, reversing seven straight months of net redemptions and providing a more positive start to 2009, acc
Investors in US stock mutual funds added modestly to their portfolios during January, reversing seven straight months of net redemptions and providing a more positive start to 2009, according to Strategic Insight.
Despite sharply falling stock prices in January, stock fund positive flows reached USD7bn, and were supported by seasonal deposits, according to estimates from Strategic Insight’s Simfund database.
Inflows were experienced in both US stock funds (USD5bn) as well as in international equity funds (USD2bn). These flows exclude the activity of ETFs.
During January, mutual fund investors net purchased USD21bn of taxable bond funds, with all key sectors showing gains, and more than USD3bn of tax-free bond funds.
Money market mutual funds benefited from more than USD64bn of net inflows, as MMF assets rose to another record nearing USD4trn.
‘January data suggests a slowing of defensive switching among stock fund investors, and implies that sizeable net redemptions are unlikely to recur,’ says Avi Nachmany, Strategic Insight’s director of research. ‘With more than two-thirds of stock fund assets held for retirement savings, the eventual recovery of stock prices will benefit most buy-and-hold investors.’
ETF bond funds garnered over USD5bn of net inflows in January, while ETF equity funds experienced modest net redemptions.
‘While overall ETF flows were modest in January, 40 such funds each gained over USD100 million of net flows in the month,’ says Loren Fox, a senior research analyst at Strategic Insight. ‘Our just-published 200-page study of ETFs, Growth, Innovation, Competition, suggests that rapid growth of ETFs should continue in 2009 and beyond.’