Mutual Fund Flows Show Investor Confidence

U.S. mutual fund investors demonstrated confidence in a gradual economic recovery, adding about $27 billion in net new cash to U.S. stock and bond mutual funds in April 2011, according to Strategic Insight, an Asset International company.

Nearly $6 billion in net new cash went into U.S. equity funds in April 2011, marking the fourth straight month of positive inflows to U.S. equity mutual fund inflows. Strategic Insight said it was another sign that demand for U.S. equity funds is rebounding in 2011, as the category drew total net inflows of $42.2 billion in the first four months of 2011. This was the best start to a year since January-April of 2006, when U.S. investors put a total of $65.4 billion into domestic stock funds.

International and global equity funds saw almost $7 billion in net flows in April, despite continued turmoil in the Middle East and North Africa.   

Taxable bond fund flows continued their positive streak in April, drawing $18 billion in net new flows, the biggest month of net inflows for taxable bond funds since drawing $21 billion in October 2010, according to the data. The search for yield buoyed bond fund demand, and flows in April were led by low-volatility bond funds and global bond funds.  

Muni bond funds saw net outflows of $4 billion in April, as continued worries about the balance sheets of states and municipalities continued to weigh on the sector. 

Money-market funds, whose assets exceed $2.6 trillion, saw net outflows of $6 billion in April.