The Markets January 12, 2011

2010 End Indicates Tide Shift for Mutual Funds

Demand among U.S. investors for stock mutual funds accelerated by year end, with aggregate inflows to equity funds, including ETFs, near $25 billion, according to Strategic Insight, an Asset International company.
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After attracting $1 trillion globally since the beginning of 2009, December marked a turning point – albeit temporary – for bond funds. In contrast to stock funds, rising interest rates, NAV declines, and year-end rebalancing triggered a spike of bond fund redemptions. December witnessed an estimated $26 billion of net outflows among all bond funds (including ETFs), the largest dollar amount since the peak of the financial crisis in October 2008. Nevertheless, global bond funds, floating rate funds, and high yield funds were a few investment areas with positive inflows.   

“Because many investors engage in year-end portfolio adjustments and tax-related moves, December is a difficult month from which to draw firm conclusions. However, it is clear that stock investor sentiment is slowly improving,” said Avi Nachmany, Strategic Insight’s Director of Research, in a press release.  

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Not including ETFs, international and global funds in December garnered net inflows of $14 billion, while domestic equity mutual funds saw net outflows of $9.5 billion. December was the seventh straight month that international and global equity funds saw positive flows.  

December’s bond-fund outflows included roughly $10 billion in outflows from taxable bond funds, although global bond funds saw net inflows in December due to investors’ increasing interest in global diversification. Also, high-yield bond funds saw inflows in December, which was a sign of an increasing appetite for risk among some investors – and in many ways an extension of improving equity sentiment. Muni bond funds saw net outflows of $13 billion in December, driven by a flood of supply (spurred by Build America Bonds) and worries about state and municipal government balance sheets.  

For the full-year 2010, long-term mutual funds attracted net inflows of $245 billion (not counting additional inflows to ETF and VA funds). That included $222 billion in net inflows to bond mutual funds – the second-largest flow numbers to bond funds ever, after 2009’s record inflows of $350 billion – and $23 billion in net inflows to equity funds, up from $14 billion in 2009 inflows to equity funds, the press release said.  

Money-market funds saw net outflows of $6.5 billion in December, a decline from the $25.1 billion in net inflows they saw in November.
Products January 12, 2011

Pershing Enhances “Advisor in Transition” Tool

Pershing LLC, a BNY Mellon company, announced upgrades to its Advisor in Transition practice management program. 
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The program allows advisers to analyze five types of business models: form a registered investment adviser (RIA) or join an RIA; form a broker/dealer or join a broker/dealer; or create a hybrid RIA-broker/dealer solution.   

The program enhancements include: 

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  • Real-time firm matching – Advisers can identify firms that are potential matches for their needs.  Provides immediate online matching results, consisting of Pershing-affiliated firms. Advisers can apply their own filters to narrow or broaden their firm list, and have the option to contact their matches directly from the site or choose to have select firms contact them.  
  • “Does It Pay to Switch?” calculator – This segment looks at the economics of advisers moving their business or launching their own firm. The calculator helps advisers analyze the costs of operating under different affiliation models.  It explores overhead comparisons and various compensation models, in addition to important issues such as the cost of legal services and office space.   
  • Interactive business model comparison chart – This resource is a side-by-side comparison of various affiliation models, including a range of features such as payout, product access, marketing, technology, compliance, and more. 
  • Insight and guidance about the transition process – The Advisor in Transition site features success stories, robust content for advisers making a move and access to leading industry experts who are available to answer questions on topics ranging from starting a business to compliance and marketing. 

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