Morningstar reported Wednesday that long-term mutual funds saw inflows of $14.3 billion in September, while U.S. equity outflows continued, reaching $16.3 billion despite experiencing the best month for stocks in 71 years.
In the past five months, investors have redeemed $65.1 billion from domestic-equity funds.
The divergence in flows between international-stock and domestic-equity funds also continued to grow, the research firm says.
International-stock funds saw modest inflows of $600 million in the third quarter, but U.S. stock funds lost roughly $42.7 billion. In the past 12 months, investors have pulled $80.9 billion from U.S. stock funds and contributed nearly $34.3 billion to international-stock funds — a difference of $115.2 billion.
“Since the market rebounded in early 2009, investors' have simultaneously embraced some of the most- and least-volatile categories, while forsaking the middle,” said Kevin McDevitt, CFA, Morningstar’s editorial director and author of the September report.
“For instance, diversified emerging-markets equity funds have taken in a robust $18.2 billion so far in 2010,” McDevitt explained. “Conversely, more mild world stock offerings have seen $9.6 billion in outflows. This apparent paradox is playing out among allocation (that is, balanced) funds as well.”
In the commodities arena, precious-metals equity flows pulled slightly ahead of broad-basket funds in September, with $692 million in inflows versus $654 million.