Strategic Insight Sees More Growth for Bond and Alternative Investments

U.S. investors put $176 billion into stock and bond mutual funds (excluding ETFs) in the first half of 2010, according to Strategic Insight (SI), an Asset International company. 

Inflows to bond mutual funds totaled $138 billion. First-half 2010 inflows were led by taxable bond funds (net inflows of $120 billion). Many of those flows went to short- and intermediate-term corporate bond funds, as they drew investors fleeing near-zero yields in cash accounts (there is nearly $10 trillion still idling in cash in banks and money funds, SI said).   

“We expect continued sizeable inflows to bond funds, and not just as cash substitutes. More flexible bond funds appeal to investors in a defensive mood and their financial advisers, with such flexibility helpful to address some (but not all) of the concerns about rising interest rates in the coming years,” said Avi Nachmany, director of research at Strategic Insight, in a press release.  

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International equity funds (1H net inflows of $34 billion) also saw healthy demand. Part of this growth was driven by emerging markets equity funds, which drew just over $10 billion in the first half – ahead of the $7 billion they drew in the first half of 2009. A limited appetite for risk restrained demand for U.S. equity funds in 1H 2010, resulting in net inflows of just $4 billion.  

Other strategies for which SI sees growth for the rest of 2010 include: 

  • Global tactical asset allocation funds – which have less constrained mandates and allow their portfolio managers to invest in multiple asset classes around the world. The emerging category of global tactical asset allocation funds drew $13 billion in net new flows in 1H 2010, versus $2 billion in net inflows in 2009’s first half. SI expects further growth and more launches of these more-flexible funds. 
  • “Alternative” mutual funds – those offering exposure to market-neutral strategies, long/short strategies, hard commodities, and other less-correlated asset classes. In the first half of 2010, alternative mutual funds (excluding ETFs) drew net inflows of $13 billion. Alternative mutual funds ended the first half with a record $116 billion in assets, up from $102 billion at the end of 2009. This growth results from more investors seeking “absolute returns” and downside protection in the wake of the financial crisis, as well as diversification of correlations to reduce volatility, according to SI.  
  • Actively managed mutual funds. During the first half, over $1 trillion of actively managed stock and bond funds were purchased by investors (SI’s estimates were based on ICI reported gross purchases, not net flows); more than 80% of funds purchased by investors and advisers are actively managed, with the balance put into passive products. 

 

(Cont...)

ETF Growth  

Strategic Insight announced that Exchange-Traded Funds (ETFs) took in $39 billion in net flows during the first half of 2010 - slightly ahead of the $35 billion in net inflows ETFs gathered in the first half of 2009.   

U.S. ETF assets (including ETNs) totaled $785 billion at the end of June, invested in a record 977 products.  

Net inflows to ETFs were led by gold ETFs, emerging markets ETFs, and short-term bond ETFs.   

More about Strategic Insight is at http://www.sionline.com. 

CAPTRUST Extends its Reach Into the Lone Star State

CAPTRUST Financial Advisors has expanded its new Texas presence with a Fidelity hire. 

 

According to the Raleigh, North Carolina-based firm, Jeffrey P. Medici, a retirement plan adviser and former Vice President with Fidelity Investments, has joined the firm.   

During Medici’s tenure with Fidelity, he served in a variety of leadership roles and earned numerous awards for his client service and commitment to the needs of plan sponsors, including Fidelity’s President’s Circle Award, according to the announcement. 

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“The decision to leave Fidelity Investments was not easy,” Medici said. “But the needs of the marketplace have changed and the time was ideal to align myself with an independent advisory firm, like CAPTRUST, who can more holistically focus on the unique needs of clients in today’s dynamic environment.” 

Medici, along with John A. Pickett, who joined CAPTRUST last month (see Pickett Helps CAPTRUST Expand into Dallas), fortifies the firm’s local presence in Dallas as CAPTRUST now looks to open offices in Houston, Chicago, New York, and Northern California. Since early 2009, CAPTRUST has grown its staff by just over fifty percent and has added offices in Ohio, California, Florida, and Texas.  

“We continue to execute on our strategic plan to be the premier advisory firm for middle market companies and their executives, “ said J. Fielding Miller, CAPTRUST co-founder and CEO. “A key part of that plan is to have a local presence in each of the nation’s top 20 retirement plan markets, either through the acquisition or hiring of exceptional, like-minded talent.  The addition of Jeff is another major win for our entire team.”  

CAPTRUST Financial Advisors is an independent investment research and fee-based advisory firm specializing in providing retirement plan and investment advisory services to retirement plan fiduciaries, executives, and high net-worth individuals. Headquartered in Raleigh, North Carolina, the firm represents $43 billion in client assets with offices in Alabama, California, Florida, Georgia, North Carolina, Maine, Massachusetts, Mississippi, Ohio, Pennsylvania, Texas, Virginia, and Washington, DC. 

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