From the September 2011 issue of Research Magazine • Subscribe!

Fund Flows Through June ’11: Total Inflows Near $35 Billion

Money-market, stock and bond funds had net outflows of $48.8 billion in June, according to data released by the Financial Research Corp., including ETFs, but excluding fund-of-funds.

Money-market funds experienced the biggest pain, with $48.3 billion in net outflows in June, which followed outflows of $5.8 billion in May. Year to date, money-market funds have experienced $136.7 billion in outflows vs. outflows of $489.4 billion for the first six months of 2010.

When combined with stock and bond funds, though, the mutual fund industry looks far healthier: It has experienced close to $35 billion in total net inflows in the first six months of 2011 vs. outflows of roughly $270 billion in the same period of 2010. Total assets stand at $12.1 trillion vs. $10.3 trillion in June 2010.

Stock, Bond Funds

Excluding money markets, long-term stock and bond funds had outflows of $487 million in June, after experiencing net inflows of $12.5 billion in May. Year to date, these fund groups have had net inflows of $171.4 billion vs. inflows of $219.3 in the same year-ago period.

On the plus side, international/global fixed-income funds experienced net inflows of $5.7 billion in the month, followed by government bonds with $4.5 billion and international/global equity funds with $2.5 billion. Tax-free funds drew $2.2 billion, while corporate-focused funds gained $665 million.

Equity funds had outflows of $16 billion, though some ETFs fared quite well: The SPDR S&P 500 attracted $4.4 billion to lead the fund sales chart, FRC says.

By Morningstar category, world bonds led the flows list in June with $3.4 billion. Intermediate-term bonds had close to $3.4 billion, while multi-sector bonds had nearly $3.1 billion in net flows. Diversified emerging-markets funds attracted nearly $3.1 billion, and emerging-markets bonds expanded by $2.6 billion.

Top Funds, Groups

Vanguard continues to top the fund-family chart in terms of assets with $1.52 trillion. American Funds is in the second-largest position with $988 billion, followed by Fidelity with $919 billion.

BlackRock has roughly $625 billion, while PIMCO has $438 billion and Franklin Templeton $355 billion. The largest fund families saw their overall asset levels fall slightly in June from the prior month by between 0.2 percent (PIMCO) and 2.5 percent (Fidelity). Year to date, though, these fund groups have grown their assets by a range of 1.55 percent (American Funds) to 7.54 percent (PIMCO and Franklin Templeton).

The SPDR S&P 500 was the most popular individual fund in June (with flows of $4.4 billion).

Other funds that attracted large flows include the Vanguard MSCI Emerging Markets Fund ($2.5 billion) and the Franklin Templeton Global Bond Fund ($2.0 billion).

Thanks to the popularity of its global-bond fund and overall investor sentiment that has recently turned against equities, the stock of Franklin Resources (the parent company of Franklin Templeton) has been trading up about 14 percent vs. stock declines of roughly 10 percent for other asset managers and custody banks included in the S&P 500, Bloomberg reported in late July.

According to FRC, the Franklin Templeton Global Bond Fund has experienced inflows of $10.7 billion in the first six months of 2011. It now has about $59 billion in total assets.

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