The Markets October 12, 2010

ETF Investors Pile On $26B in September Asset Growth

Investors added $26 billion to U.S. exchange-traded funds (ETFs) in September, resuming the trend of monthly net inflows interrupted by $1 billion in August outflows, according to Strategic Insight, an Asset International company.
Reported by

According to SI, in the first nine months of 2010, ETFs (including ETNs) took in $73 billion in flows. At the end of September, U.S. ETF assets stood at a record $897 billion. 

“We stick by our prediction, made over a year ago, that U.S. ETF assets would hit $1 trillion by the end of 2011,” said Loren Fox, a senior research analyst at Strategic Insight. “Recent developments, such as the spread of commission-free ETF trading at certain brokerages, should only accelerate the growth of ETFs.”

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The Markets October 12, 2010

Funds Bring in $16B in September

Propelled by demand for bond funds and international exposure, U.S. mutual fund investors added about $16 billion in net new cash to U.S. stock and bond mutual funds in September 2010, according to Strategic Insight (SI), an Asset International company.
Reported by

An SI news release said September’s net inflows were a slight decrease from the $19.5 billion of net new flows into long-term funds seen in August.

Ongoing economic and employment uncertainty dampened investor confidence, reducing the appetite for domestic equity funds – and resulted in $15 billion in net outflows from U.S. equity funds in September (a tiny amount compared with the industry’s $5 trillion in equity fund assets), SI said.

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However, an increasing focus on international diversification, including a growing allocation to emerging markets, led to $5 billion in net inflows into international and global stock funds. In the first nine months of 2010, investors have put $39 billion into international and global equity mutual funds. September’s international bent also was echoed in bond funds, where global bond funds saw $5 billion in net inflows in September, SI said.

Meanwhile, bond funds experienced net inflows of $26 billion in September, as investors continued to demand short- and intermediate-maturity bond funds for alternatives to low-yielding cash vehicles, SI said. In addition, investors used general bond funds as less volatile means of participating in global financial markets. Overall, taxable bond funds drew roughly $23.5 billion in net investments in September, and muni bond funds attracted $2.3 billion.

In the first nine months of 2010, net inflows to bond funds totaled $223 billion (not counting additional inflows to bond ETFs and bond VA funds). In comparison, the same universe of bond funds drew roughly $250 billion of flows in the first nine months of 2009, on their way to a record $350 billion in flows for the entire year. In 2010, bond fund flows should top $300 billion in total annual flows for only the second time in history, the SI report said.

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