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Yearly Mutual Fund Inflows Hit 4-Year High; Vanguard Is Tops

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Assets in long-term mutual funds attracted $14.5 million in November, bringing year-to-date inflows to $258.8 million, a pace that Morningstar says should place 2013 as the strongest for yearly inflows since 2009.

With inflows of $65.3 billion through November and 25% of industry inflows, Vanguard is set to top all mutual fund providers for the third year in a row, Morningstar reported Monday. Dimensional Fund Advisors, behind strong inflows for its international equity and taxable bond offerings, is second in year-to-date inflows with $21 billion, its strongest year on record.

In its November fund flows report, Morningstar said that robust inflows combined with equity market appreciation have pushed mutual fund assets to a record $10.8 trillion, up 30% since the peak seen in October 2008.

Other notable highlights from Morningstar’s November mutual fund flows report include:

  • International equity funds had the most inflows by category group, collecting $15.6 billion in November to reach $132.2 billion for the year to date. Foreign large blend led all international equity categories in year-to-date flows, followed by diversified emerging markets.
  • Overall, equity funds took in $198.0 billion through November and are on track for their strongest year since 2000. U.S.-equity funds, which attracted new assets of $42.4 billion so far in 2013, are poised for their first year of inflows since 2006. While passive funds accounted for most of these U.S. equity fund inflows, outflows from active U.S.-equity funds have moderated.
  • Alternative mutual funds saw record inflows of $37.1 billion for the year to date, a 41% organic growth rate. The category group had inflows virtually every month over the past five years, but assets in the group make up just 1.2% of long-term mutual fund assets. Eight funds in the alternative category group had year-to-date inflows of more than $1.0 billion.
  • Bank loans led all taxable-bond categories in year-to-date inflows, followed by nontraditional bond; intermediate-term bond and government bond experienced the largest outflows.

As for REITs, U.S. REIT returns were negative in November and continued to underperform the broader equity market for the first eleven months of the year, according to NAREIT.

On a total return basis, the FTSE NAREIT All REITs Index was down 4.41% in November and the FTSE NAREIT All Equity REITs Index was down 4.87%, while the S&P 500 was up 3.05%.

Year to date through November, the FTSE NAREIT All REITs Index gained 2.35% and the FTSE NAREIT All Equity REITs Index gained 2.26%, while the S&P 500 was up 29.12%.

For the 12 months ended Nov. 30, the FTSE NAREIT All REITs Index was up 5.62% and the FTSE NAREIT All Equity REITs Index was up 5.99%, compared to the S&P 500’s gain of 30.30%.

Most sectors of the U.S. REIT market delivered single-digit total returns for the first eleven months of 2013, but two segments produced double-digit returns, NAREIT reported.

Commercial financing mortgage REITs were the industry’s top-performing segment for the year through November, with a 29.87% total return. They were followed by the lodging/resorts sector with a 23.14% total return.

Among other REIT market sectors in the first eleven months, self storage was up 9.92%; industrial was up 9.67%; freestanding retail was up 9.01%; shopping centers was up 7.08%; and manufactured homes was up 6.51%.


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