The fund industry has attracted nearly $150 billion in net new assets during the first six months of 2006, according to Financial Research Corporation’s latest estimates. That’s an increase of about 18 percent over net flows in the first six months of 2005, which were $125 billion.
Total assets in mutual funds and ETFs stand at $6.6 trillion, up about 15 percent from a year ago, says the FRC, when total assets were $5.8 trillion.
But the pace of net flows into many of the best-selling fund groups appears to be slowing (see chart). New money continues to come in to groups such as American Funds, Vanguard Group and Dodge & Cox; however, the amount of money has declined a bit from year-ago levels. Nonetheless, Fidelity has seen a strong flow of net new assets, as have ETF groups like Barclays and PowerShares Capital.
By category, FRC estimates that large-blend, foreign large-blend, large-growth and foreign large-value mutual funds and ETFs drew in most flows in June. Both foreign large-blend and world stock funds are leading the estimated flow of funds in the first six months of the year, along with intermediate-term bond funds.
Large-cap value funds tracked by Emerging Portfolio Fund Research have experienced inflows of more than $7 billion as of late July.
“Some large-cap holdings have been seen as safer in the past few months,” says James Wiess, CFA, a portfolio manager of the Putnam Investors Fund (PINVX). “Our focus is: What is the market putting on sale?” Wiess says he looks for the best risk-to-reward opportunities for the market.
The Putnam Investors Fund — which is posting flat returns year to date, but is up 12 percent for the past three years — is heavily invested in the financial and insurance sectors. Capital One Financial Corporation, Citigroup, Bank of America and Countrywide Financial were some of the fund’s top holdings as of June 30. Except for Capital One, these stocks were showing positive returns through August 4.