Bonds: Partying Like It’s 1999?

Still, the Morningstar expert notes, “the vast majority of 1990s equity inflows likely came from new contributions rather than exchanges from other asset classes.” And, unlike today, money-market flows remained positive during the late 1990s.

Much of the $728 billion in bond-fund inflows since January 2009 have come from investors “either abandoning equity funds or leaving money-market funds in search of higher yields,” explains McDevitt.

In addition, the current rush into bond funds may be no more prudent than what occurred in the late 1990s, but it is at least “less speculative,” the fund expert says.

“Fear, along with a desire for income, rather than greed seems to be the dominant emotion. An aging population and volatile equity markets have likely led some investors to cut back on equity exposure. At the other end of the spectrum, the Fed’s zero-interest-rate policy has pushed savers reluctantly out of money-market funds and into bond funds in a desperate search for income,” McDevitt said in the report.

Fund Families

Despite a recent $2 billion trading fiasco, JPMorgan “has been one of the more impressive growth stories in recent years” when it comes to funds, says Morningstar.

Over the past three years, the firm’s asset base grew to $158 billion from $62.8 billion. And not just bond funds but actively managed equity funds—JPMorgan Large Cap Growth, JPMorgan Equity Income, and JPMorgan U.S. Equity—can take some credit for this achievement.

With about $158 billion in fund assets, JPMorgan trails Vanguard, PIMCO and T. Rowe Rice, while it is ahead of Dimensional Fund Advisors and DoubleLine.

Meanwhile, PIMCO Total Return led all funds with $2.7 billion in inflows; the fund’s best monthly inflows since August 2010. DoubleLine Total Return’s inflows have slowed in recent months, but the fund still absorbed $1.3 billion.