Investors Shun Actively Managed U.S. Stock Funds
Despite stronger domestic equity markets in January and February, with the S&P 500 Index up 9% on a total return basis through the end of last month, investors continued to shun actively managed U.S. stock funds, pulling out more than $10 billion during the first two months of 2012. The outflows from actively managed U.S. stock funds weren't as bad as in the third and fourth quarters of last year (when investors pulled out $49 billion and $46 billion, respectively), but still a far cry from the more than $15 billion that flowed into these funds during the first quarter of 2011. Meanwhile, flows into U.S. stock index funds and exchange-traded funds look to be on par with what we were seeing in the year-ago period, with $7 billion and $14 billion, respectively, flowing into these passive investment vehicles.
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Taxable Bonds Continue to Dominate Fund Flows
From the start of 2009 until the end of 2011, more than $550 billion flowed into actively managed taxable bond funds, with another $190 billion being dedicated to passively managed products (45% index funds/55% ETFs). Based on results seen through the first two months of this year, with $20 billion flowing into actively managed taxable bond funds during January and another $24 billion coming through in February, it looks like 2012 could end up being the fourth straight year when flows into the taxable bond category far outstrip those for any other category tracked by Morningstar Direct.