Mutual Funds, ETFs Reach New Highs in January

January mutual fund flows of $86.6 billion were record-breaking, and exchange-traded fund (ETF) assets reached a new high of $1.4 trillion at the end of the month.

Data from Cerulli Associates shows ETF assets have increased each month since October. Since January 2012, when assets totaled $1.1 trillion, ETFs expanded by 23.9% in one year.   

Overall ETF flows were positive during the month with $28.1 billion, but a step down from December when total flows were $38.1 billion. Equity asset classes ran the monthly flow leader board with international stock, sector stock, and U.S. stock reigning in top flows. Balanced ETFs experienced the most asset growth among the asset classes with an increase of 14.9% in January.   

Diversified emerging markets drove ETF category inflows in January with $6 billion. International stock funds benefited from their success with the highest asset class flow during the month, $15.1 billion. U.S. stock ETF flows slowed in January ($4.3 billion), after garnering $24.3 billion in December. Despite healthy 2012 total flows and five consecutive months of inflows, commodities ETFs dropped into outflows (-$800 million) in January. After three consecutive months of outflows totaling -$1.6 billion, alternatives switched into positive flows for the month with $9.5 million.


Among mutual funds, all asset classes gathered positive flows in January. Growing by 5.3%, U.S. stock increased assets the most among all classes for the month, and commodities followed with 4.2%. After 20 consecutive months of net redemptions, U.S. stock mutual funds secured monthly inflows in January ($15.5 billion). Equity funds almost surpassed fixed-income fund flows during the month with $37.8 billion and $32.8 billion, respectively.  

Despite strong inflows for most taxable bond funds in January, the government bond fund categories experienced net redemptions. Intermediate-term bond funds continue their dominance, attracting another $10.5 billion in net flows in January. If this trend continues, intermediate-term bond funds ($1.09 trillion) could surpass large-cap blend funds ($1.22 trillion) as the largest money market category by assets, Cerulli said.   

Passive and active mutual funds garnered strong inflows in January with $65.1 billion and $21.4 billion, respectively. Nearly half (49.6%) of January passive fund flows were driven by funds in the U.S. stock asset class. Large-cap blend ($6.9 billion) and intermediate-term bond ($4.4 billion) categories captured the most passive fund net flows for January; incidentally, these categories are also the largest. Among active funds, intermediate-term bond ($6.1 billion) and diversified emerging markets ($4.8 billion) were the leading categories by net flows in January.  

Data is from the February 2013 Issue of “The Cerulli Edge - U.S. Monthly Product Trends.” Information about purchasing the report is here.