August 11, 2010

Mutual Fund Volatility Remains High, ReFlow Index Shows

Individual asset classes show mixed performance results

ReFlow Management Co., LLC recently introduced the ReFlow Fund Flow Volatility Index (FLIX) to help mutual fund managers track asset flows and fund performance. The index tracks monthly gross flows as a percentage of assets under management, according to the company's website. The FLIX Index tracks open-end, long-term mutual funds, but does not track money market funds or ETFs.

After a 616 basis point spike in May, the FLIX Index fell 13.5% to 573 in June. Volatility remains high, the Index found, but performances among asset classes are mixed. Equity funds experienced low redemptions and sales in June, while bond funds showed strong sales and high redemptions, "reflecting growing ambivalence among investors toward fixed-income products," according to the Index.

Total gross flows for long-term funds fell to $446 billion.

The FLIX Index dropped slightly for equity funds from 551 in May to 513. Gross inflows fell $3 billion to $139 billion for June. Gross outflows fell even more, dropping $35 billion to $133 billion. Total gross flows for equity funds was $241 billion.

The Index for fixed-income funds fell 13.9% to 772 in June, but beat the 12-month moving average of 747. Inflows fell slightly to $88 billion. Redemptions also fell, dropping to $63 billion; still, they beat the 12-month moving average by $14 billion. Total gross flows for bond funds were $150 billion.

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