2010 Fund Flows Could Go into Record Book

U.S. mutual fund investors have put nearly $200 billion into stock and bond mutual funds so far in 2010, according to Strategic Insight (SI), an Asset International company.

An SI news release said that even if net inflows slow from this rapid pace, it is likely that full-year net inflows would top $450 billion, making 2010 a record for annual inflows into stock and bond funds.

The previous record for annual inflows into stock and bond funds was set last year, when just more than $400 billion went into long-term funds, according to Strategic Insight’s Simfund database. These figures include open- and closed-end mutual funds and funds underlying variable annuities, but exclude ETFs.

The near-$200 billion that has flowed into stock and bond funds through April of 2010 was only the second time in the history of U.S. mutual funds that inflows during the first four months of the years reached about $200 billion; the previous time was the first four months of 2007, when net inflows to stock and bond funds totaled more than $210 billion.

“Lately we are observing the early signs of thawing of investors’ reluctance to get back on the stock market train. Assuming further economic and employment improvements in the coming months, more such investors should inch higher in their risk curve,” said Avi Nachmany, SI’s Director of Research, in the news release. “But turmoil in Europe and the fragility of the U.S. recovery are just a few of the many concerns still on investors’ minds.”

For all of 2010, Strategic Insight projects that U.S. stock and bond fund new sales are on track to rise 20% (or more) from their 2009 pace.

Worldwide, mutual fund investors have added nearly $1.4 trillion of net flows to bond and stock funds since March 2009’s bottom of the financial markets.