According to a list of the most researched investments in Morningstar’s platforms in 2012, about half of institutional investors’ most researched products were mutual funds, exchange-traded funds (ETFs), and separate accounts focused on domestic and international equities.
In January 2013, equity mutual funds saw inflows of $15.5 billion, the largest monthly intake to equity funds since 2004 and the first month of inflows to stock funds in nearly two years, according to Morningstar’s U.S. mutual fund asset flows report. While institutional investors demonstrated interest in equity funds or strategies in 2012, advisers and individuals were focused on income and risk mitigation.
Highlights of the most-researched investments in Morningstar platforms in 2012:
Large-cap equity strategies led the list of most-researched separate accounts by institutional investors, including six of the top 10.
Despite the institutional focus on equities, PIMCO Total Return Fund found a spot on the most-researched investment lists for individual investors, advisers, and institutions alike.
The four most viewed ETFs by individual investors, as well as six of the top 10, were from Vanguard, while iShares ETFs were researched most by advisers and institutional investors.
Dividend-focused ETFs were the most viewed investments among individual investors, while advisers showed particular interest in inflation-hedging ETFs, such as SPDR Gold Shares and iShares Barclays TIPS Bond, as well as emerging markets ETFs.
“Individual investors and financial advisers have been focused on producing income and avoiding risk for the last four years,” said Paul Justice, director of fund research for Morningstar. “This is consistent across ETFs and open-end mutual funds, based on our fund flows and investment search statistics. While their risk aversion is high, they seem to be making an exception for emerging market equities, which illustrates that whatever risk appetite remains is focused overseas.”
But institutional investors are telling a different story, according to Justice. “They seem to be demonstrating an affinity for domestic equities across the capitalization spectrum, as well as international stocks,” he said. “It’s also interesting to note that institutional investors searching the separate account space focused almost exclusively on active strategies last year. Perhaps the lower negotiated prices of separate accounts for large managers indicate that investors still have an appetite for active management, but only at a competitive price.”
Morningstar compiled the list by totaling the most-researched mutual funds, exchange-traded funds (ETFs), and separate accounts from Jan. 1, 2012 through Dec. 31, 2012 on Morningstar Direct, its global investment analysis platform for institutional investors. Morningstar also assembled a list of the most-researched mutual funds and ETFs from Morningstar Advisor Workstation, its investment planning and research platform for financial advisers for the same time period.
The top three mutual funds researched by institutional investors, through Morningstar Direct, were:
- PIMCO Total Return Institutional
- Dodge & Cox International Stock
- Harbor International Institutional
The top three ETFs researched by institutional investors, through Morningstar Direct, were:
- SPDR S&P 500
- Vanguard FTSE Emerging Markets ETF
- iShares MSCI EAFE Index
The top three mutual funds researched by advisers, through Morningstar Advisor Workstation, were:
- Templeton Global Bond A
- PIMCO Total Return A
- American Funds Growth Fund of America A
The top three ETFs researched by advisers, through Morningstar Advisor Workstation, were:
- SPDR Gold Shares
- iShares Barclays TIPS Bond
- Vanguard Dividend Appreciation ETF