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

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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