An amazing 90 percent of mutual fund investments missed the equities market rally of the past few months: Of the year-to-date inflow, about $209.1 billion, or more than 90 percent, has gone into taxable-bond and municipal-bond funds.
This means that mutual-fund investors have missed out on the stock market's roughly 50 percent bounce from its March low.
Through August, about $226.4 billion flowed into U.S. open-end funds in 2009, according to figures from Morningstar.
“Fund firms are close to making up the ground lost in the second half of 2008, when investors pulled $251 billion out of mutual funds," a Morningstar investment researcher noted.
Investors put $54 billion into all types of mutual funds last month, but 60 percent went into bonds, not equities.
"That represents the largest inflow since February 2007,” Morningstar said.
“While that's certainly a positive sign for fund firms, it doesn't necessarily signal renewed enthusiasm for equities.”
Pimco’s Total Return Fund has benefited hugely from investor fears, raking in nearly $5.5 billion of inflows last month alone and giving the fund a 13 percent share of the taxable-bond mutual fund market.
That’s almost twice as large as Vanguard Total Stock Market Index Fund, the next most popular fund.
PIMCO increased holdings of government-related debt last month to the most in five years and cut mortgage securities, Bloomberg reports.
The bond giant reduced its mortgage debt holdings from 37 to 38 percent, the lowest level since early 2007.
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