Mutual Fund Flows Slow in November

After contributing $26.8 billion to long-term mutual funds in October, investors added just $2.7 billion in November, according to data from Morningstar.

Investors lost enthusiasm for fixed-income funds as well. Money market funds were the direct beneficiaries with inflows of $24.7 billion, their best month since January 2009, a press release said.  

Inflows for taxable-bond funds reached just $6.1 billion in November versus $21 billion in October, the smallest monthly inflow for the asset class since May. After 22 consecutive months of net inflows, municipal-bond funds saw net outflows of $7.6 billion in November. This reversal comes after investors added nearly $105.6 billion to the asset class from January 2009 through October 2010 and marks the worst month for municipal-bond funds in terms of net outflows except for the $8 billion redeemed in October 2008 during the credit crisis.   

Rising rates and currency swings contributed to a tough month for emerging-markets bond and world-bond funds, some of the more aggressive areas of the bond market. Nevertheless, money continued to flow to emerging-markets bond funds. These offerings have collected more than $13.7 billion in 2010, and total assets have nearly doubled over the last 12 months to $36.8 billion, according to the press release.   

Large-growth funds had the biggest outflows of any Morningstar category this year, losing $43.5 billion.  

Investors pulled $1 billion from Vanguard funds in November, the firm’s first month of long-term fund outflows since October 2008. Equity-oriented families including American, Fidelity, and Columbia also continued to suffer outflows. Despite redemptions of $1.9 billion from PIMCO Total Return, the fund’s first month of net outflows in two years, PIMCO still took in $1.1 billion during November.