Q2: Two-Year Best for Mutual Funds

U.S. stock and bond mutual funds generated the best quarter of long-term fund inflows in more than two years during the second quarter of 2009, according to Strategic Insight.

In 2009’s second quarter, investors put $136 billion into bond and stock mutual funds, and adding net inflows to exchange-traded funds (ETFs) brought second-quarter 2009 inflows to more than $150 billion, according to a press release. Those figures, based on Strategic Insight and Investment Company Institute data, marked the best quarter for long-term funds since the first quarter of 2007, when stock and bonds drew a combined nearly $150 billion.

U.S. bond funds were the brighter spot of the near $11 trillion U.S. mutual fund industry. In the second quarter, bond funds drew net inflows of nearly $90 billion, most into taxable bond funds as investors, emboldened by the stock market recovery but still highly risk-averse, shifted assets away from near-zero yielding cash instruments, the press release said.

In the second quarter, equity funds took in an estimated $47 billion in net new flows. Investors put about one-third of equity-fund flows into international stock funds, a trend that gained momentum in June on the back of rising international stock prices.

“Including June, equity funds have now enjoyed three straight months of solid inflows. Investors are tiptoeing back into riskier asset classes,” said SI senior research analyst Loren Fox, in the press release.