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Strategic Insight: stock and bond funds appreciate by $1 trillion in 2012

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Stock and bond fund investors have enjoyed this year more than $1 trillion in asset appreciation, helped by strong stock fund total returns, according to a new report from New York-based Strategic Insight.

The research reveals that investors enjoyed total average returns of more than 12 percent from January through October and total bond fund returns averaging nearly 8 percent over the same period.

Asset appreciation, as well as net inflows to bond and stock funds (including exchange-traded fund flows) are projected to exceed $400 billion for all of 2012. This result, the report states, would make 2012 a near-record year for the expansion in asset under management for the U.S. mutual fund industry (second to 2009 when asset gains jumped $2 trillion from a depressed level as markets rebounded strongly).

In October, the survey reveals, net inflows to bond funds reached $30 billion. Bond funds are projected to amass more than $300 billion in net inflows for the full year, exceeding 2010 and 2011 pace.

Equity fund net redemption were $15 billion. ETFs investing in stocks experienced also modest redemptions of $2 billion in October, following inflows of $38 billion during September, their highest monthly take in four years.

The survey indicates that ETF products benefitted from $3 billion of October net intake, bringing total ETF net inflows (including ETNs) to nearly $140 billion for the first 10 months of 2012, exceeding the full-year gain in each of the past three years.

Outside the U.S., ETFs gained $45 billion to date. Globally ETF net flows in 2012 should exceed $200 billion, the survey  states.

Target date funds attracted $5 billion in net flows during October, increasing YTD net intake to $45 billion.

“This year target date products are on track to rival the annual net flows record set in 2007 of $58 billion,”  says Bridget Bearden, head of Strategic Insight’s Defined Contribution and Target Date funds practice.

Money-market funds moved into net redemptions during the month of $8 billion, bringing redemptions in such funds to nearly $144 billion in 2012.