Morningstar says that investors added $86.5 billion to long-term open-end mutual funds in January, with 72 of 93 open-end categories recording inflows. When these flows are combined with $28.6 billion of inflows for exchange-traded funds, it was “by far the largest one-month inflow on record,” the Chicago-based research firm says. All asset classes and each of the top-10 open-end fund providers saw long-term fund inflows.
“Market observers have been waiting for a sign that the multi-year trend of investors buying fixed income while selling U.S. stocks would reverse in a so-called ‘great rotation,’” said Mike Rawson, fund analyst on Morningstar’s passive-funds research team,” in a statement.
“Inflows of $15.5 billion for U.S.-stock funds, the largest monthly intake since 2004, and the first month of inflows in the last 23 for active U.S.-stock funds, support this development,” Rawson explained. “However, U.S.-stock funds experienced slower organic growth than any other major asset class in January, and seasonal and one-time factors such as lump-sum contributions to retirement accounts and acceleration of dividend payments indicate that claims of a paradigm shift in investor behavior may be premature.”
Still, according to TrimTabs Investment Research, an all-time record $77.4 billion flowed into U.S.-listed equity mutual funds and exchange-traded funds in January. In addition, Strategic Insight says that it projects bond fund inflows to persist in the coming months, as investors holding $10 trillion of cash slowly search for income opportunities elsewhere.
Strategic Insight, a business intelligence provider to the fund industry, reports that approximately $51 billion, or more than half, of the January net flows went into stock and balanced mutual funds, marking the largest monthly amount in more than a decade. Additional net inflows went to stock ETFs, the company said. These figures, the company said, suggest that U.S. investors are finally re-entering the stock market through mutual funds.
According the research group Lipper, conventional equity mutual funds attracted $5.8 billion in net inflows in the last week of January, bringing their four-week total to $20.7 billion. This represents their largest four-week total since April 2000.