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.
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.