Funds See $25B in July Flows

Driven by ongoing demand for bond funds, U.S. mutual fund investors added about $25 billion in net new cash to U.S. stock and bond mutual funds in July 2010, according to Strategic Insight (SI), an Asset International company. 

An SI news release said July’s net inflows were an improvement over the roughly $14 billion of net new flows seen in June and the net redemptions of $8 billion in May.

SI data showed equity funds enjoyed modest net redemptions of $5 billion in July, 0.1% of equity fund assets. U.S. domestic equity funds saw net outflows of just over $7 billion. Meanwhile, U.S.-based international/global equity funds experienced net inflows of nearly $2 billion, attracting a portion of some investors’ growth-oriented capital.

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Bond funds experienced net inflows of $30 billion in July, as inflows persisted among many lower-volatility bond funds used for cash management. In general, U.S. taxable bond funds drew $25 billion in net investments and U.S. muni bond funds attracted $5 billion – in both cases drawn in part by the search for income amid near-zero yields on cash and money-market vehicles.

“Even in the face of financial-market unpredictability, risk-averse investors are using mutual funds – especially bond funds – for long-term investing,” commented Avi Nachmany, SI’s Director of Research, in the news release. “Early August has been marked by further doubts about the economic environment, which suggests that strong bond-fund demand will continue.”

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