The Markets January 7, 2007

Mutual Funds See Decrease in Fund Flows for November

Stock and bond funds experienced net inflows of $17.4 billion in November, down from the $29.8 billion they brought in the month before, according to monthly data from the Financial Research Corporation (FRC).
Reported by

According to the data, International Global funds again stayed in the lead, with net inflows of $13.3 billion, followed by Corporate funds, with a $7 billion net intake. Domestic Equity funds changed courses again, and posted net flows of $685 million (See Domestic Equity Reverses Course in October). Government funds had a net outflow of $4.2 billion.

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By Morningstar category, Intermediate-Term Bond funds took in $5.4 billion in assets in November, while Foreign Large Blend funds posted net inflows of $3.2 billion and Large Blend funds experienced net inflows of $2.5 billion.

American Funds moved up to the top spot, making it the best selling fund group for the month of November with an intake of $6.1 billion. Vanguard Group funds followed, with $4.9 billion in net inflows. Fidelity Distributors funds, with $3.2 billion; and Barclays Global Investors Funds, with $2 billion rounded out the top five.

The best selling funds in November were American Funds’ American Capital Income Builder, with $1.3 billion; Dodge and Cox’s Dodge & Cox International Stock, with $1.17 billion and Fidelity Distributors’ Fidelity Sp Tot Mk, with $1.09 billion.

Complete FRC data can be found at www.frcnet.com.

The Markets January 6, 2007

A Look Back at Historical Performance

New data published by Morningstar offers a historical perspective on the market returns of major asset classes.
Reported by
The data, which reflects updated historical market figures* for the major asset classes from the beginning of 1926 through 2006, and for the year just ended, is based on data from Ibbotson Associates:
1926 Forward
Large-Company Stocks (as measured by the S&P 500) returned 10.4% per year (unchanged from 2005)
Small-Company Stocks (bottom 20% of companies by market cap on the NYSE and companies of similar size on the NASDAQ and AMEX) returned 12.7% per year (compared to 12.6% from 1926 through 2005).
Bonds (long-term government) returned 5.4% per year (compared to 5.5% from 1926 through 2005)
Cash (30-day T Bill) returned 3.7% per year (unchanged from 2005)
Inflation remained 3.0%
2006 returns:
Large-Company Stocks returned 15.8%, compared to 4.9% in 2005.
Small-Company Stocks returned 16.2%, compared to 5.7% in 2005 (8th year in a row that the index beat large-cap stocks. Last time small stocks had a run that long was the 10-year period from 1974 through 1983)
Bonds returned 1.2% (lowest return since 1999), compared to 7.8% in 2005
Cash returned 4.8%, compared to 3.0% last year
Inflation was 2.0% down from 3.4% last year
*These numbers are not adjusted for inflation and assume reinvested dividends.

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