From the October 2009 issue of Research Magazine • Subscribe!

Fund Groups 'Regaining Lost Ground'

Investors put more than $54 billion into U.S. open-end mutual funds in August 2009, the largest inflow since February 2007.



Through August 31, 2009, more than $226 billion flowed into U.S. open-end funds, according to the latest data compiled by Morningstar. "Fund firms are close to making up the ground lost in the second half of 2008, when investors pulled $251 billion out of mutual funds," says Sonya Morris, CFA, editorial director of Morningstar.

Investors put more than $54 billion into U.S. open-end mutual funds in August, the largest inflow since February 2007. In the first eight months of the year, the vast majority of inflows have been to fixed-income funds, Morningstar data shows: About 60 percent of August's flows went to taxable-bond six-fold in the past decade.

For its part, Franklin Templeton has been lifted by its fixed-income offering. The Templeton Global Bond Fund "skillfully navigated last year's difficult conditions despite a hefty stake in emerging-markets bonds," says Morris, and it took in $1.3 billion in August and more than $5 billion so far this year.

In terms of performance, the Dodge & Cox International Fund is up 36 percent for the year-to-date period, which means it is outperforming 94 percent of all category competitors, reports Morningstar.

And the Dodge & Cox Stock Fund has gained almost 20 percent so far this year, putting it in the large-value category's top 20 percent.

Most major fund firms had inflows in August, according to Morningstar, with investors sending $3.4 billion to Fidelity funds in August. The firm has seen net inflows of $15 billion year to date.

Meanwhile, Vanguard took in more than $9 billion for the month, and its year-to-date inflows are almost $66 billion.

August proved to be a bright spot for Oppenheimer; the firm saw $829 million in inflows for the month, Morris explains, and "three funds in particular accounted for much of the inflows -- Developing Markets, International funds, and municipal-bond funds made up another 20 percent.

DFA funds attracted more than $1.8 billion in August, the firm's best month since February 2007. Morningstar says that these August flows represent 40 percent of the firm's year-to-date total flows.

In terms of sector funds, the jump in gold prices -- which moved north of $1,000 an ounce in early September as copper price forecasts for the fourth quarter of 2010 topped $7,500 a ton -- influenced flows into commodity-sector funds, according to EPFR Global. They took in $621 million -- four times as much as the sector fund group with the next largest inflows -- as the year-to-date total for commodity funds moved with striking distance of $8 billion. The dollar's weakness also contributed to the inflows, the research group notes.

Funds with a focus on real estate and financial services had inflows of $156 million and $121 million respectively in early September, as signs of a recovery in key housing markets fueled hope that bank balance sheets will make better reading going into the fourth quarter, says EPFR Global.

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