From the May 2008 issue of Boomer Market Advisor • Subscribe!

May 1, 2008

Mutual fund assets fall...while ETF assets rise

The combined assets of the nation's mutual funds decreased for the three month period of December 2007 through February 2008. However, as a possible silver lining, mutual funds assets in fact rose during the month of February. Here's how it shook out for the month:

Combined assets increased by $14.37 billion, or 0.1 percent, to $11.74 trillion in the latest Investment Company Institute tabulation. Long-term funds (stock, bond and hybrid funds) had net inflows of $27.64 billion versus an outflow of $22.12 billion in January.

Stock funds posted an inflow of $9.51 billion, compared with an outflow of $44.87 billion in January. Among stock funds, world equity funds (U.S. funds that invest primarily overseas) posted an inflow of $5.89 billion versus an outflow of $9.23 billion in January. Funds that invest primarily in the U.S. had an inflow of $3.62 billion versus an outflow of $35.64 billion in January.

Hybrid funds posted an inflow of $3.26 billion, compared with an outflow of $1.48 billion in January.

Bond funds had an inflow of $14.87 billion, compared with an inflow of $24.23 billion in January. Taxable bond funds had an inflow of $13.66 billion, versus an inflow of $21.72 billion in January. Municipal bond funds had an inflow of $1.21 billion, compared with an inflow of $2.51 billion in January.

Lastly, money market funds had an inflow of $92.16 billion, compared with an inflow of $160.42 billion in January. Funds offered primarily to institutions had an inflow of $70.05 billion. Funds offered primarily to individuals had an inflow of $22.11 billion.

In a strange twist, the exact opposite occurred with ETFs. But alas, the good news could not be sustained. The combined assets of the nation's exchange-traded funds (ETFs) were $559.31 billion in ICI's latest tabulation, up significantly from $433.4 billion at the same time last year.

However, assets fell for the month of February. Assets of all exchange-traded funds fell by $9.41 billion, or 1.7 percent, to $559.31 billion. Over the past 12 months, ETF assets increased $125.91 billion, or 29.1 percent.
Assets in domestic equity ETFs increased $55.48 billion, and global equity ETFs assets went up $51.87 billion during this period. Assets of bond index funds were $39.88 billion and hybrid index funds were $138 million.

During the reporting period, the value of all ETF shares issued fell short of shares redeemed by $6.93 billion and ETFs experienced a net issuance of $4.99 billion.

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