Mutual Funds See Healthy Inflows in July

Long-term funds of all types attracted $30 billion in July, lifting year-to-date net inflows to $293 billion, according to Strategic Insight (SI), an Asset International company.

Inflows to equity funds in July totaled $18.2 billion, driven by a $15.2 billion inflow to international equity funds. The international total return category had the most inflows, with $1.8 billion, and emerging market equity finished in a close second for the asset class, at $1.6 billion.

The total U.S. Equity fund inflows of $3 billion were driven by demand for income-oriented mutual funds ($1.2 billion), as well as exchange-traded products, according to SI.

Both short- and intermediate-term strategies led July’s $11.8 billion commitment to bond funds. The flow-leading taxable bond strategies included the corporate bond general category, which saw $5.3 billion of inflows, and corporate short maturity ($3.4 billion). The $1.6 billion July inflow for tax-free bond funds was in large part driven by demand for muni-short funds ($1.1 billion).

A heavy selling session on the last trading day of the month sent equity returns into negative territory in July, as the weighted average of one-month returns for U.S. equity and international equity funds were -2.1% and -1.5%, respectively. Yield movement was mixed during the month, and taxable bond funds’ average return was -0.4%. Tax-free bond funds averaged a 0.1% return.

The data from SI also reveals steady inflows continued to non-traditional funds in July—the category again recording $6 billion of monthly aggregate net inflows. Both U.S. equity alternatives and taxable bond alternative funds have experienced success year-to-date in 2014, SI says, attracting $16.9 billion and $3.7 billion, respectively.

The income-mixed, flexible U.S., and natural resources equity objectives each collected in excess of $1 billion again in July. Money Market fund redemptions totaled $18.8 billion in July.

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