International Equities Continue to Win over Domestic Equities

SI’s Highlights of October 2009 Mutual Fund Industry results shows equity fund flows, on the other hand, remained small in October, as investors remained wary of stocks for the most part. SI said it projects only a slow recovery in stock fund sales next year, and for high bond fund demand to persist.

International equity fund flows rose to $14 billion in October, while U.S. equity funds suffered net outflows (for the second straight month), reducing the aggregate equity fund net flow total for October to $7 billion. U.S. dollar depreciation and concerns have boosted flows into international/global equity funds in 2009, which have brought in roughly $70 billion on a net basis over the April-October period this year, double the volume received by U.S. equity funds over the same period, the report said.

Assets in money-market mutual funds, where investors are currently earning near-zero yields, declined by an additional $64 billion in October, as shifts to higher-yielding investments persisted.

ETF/ETN flows totaled $7 billion in October, and were driven by Diversified Emerging Market equity; Inverse-exposure; Short- and Intermediate-term and Inflation-Protected Bond; and Precious Metals funds. Year-to-date through October, ETFs/ETNs have collectively garnered an estimated $70 billion in net new flows, compared to the same period last year, when the products had captured $110 billion in net flows through October.

Actively managed U.S.-focused equity/hybrid funds suffered net outflows of about $8 billion in October.

Among smaller-size managers of long-term funds, those that led in total long-term fund flows in October were TCW, Van Eck, Manning & Napier, Rafferty Asset Management, Sentinel Asset Management, Metropolitan West Asset Management, International Value Advisors, Matthews Asian Funds, Lazard Asset Management, and Henderson Global.

Among the largest firms (firms with more than $20 billion in long-term fund assets under management), those garnering the most long-term fund flows were PIMCO/Allianz Global ($10.2 billion); Vanguard ($9.9 billion); Barclays Global Investors ($3.7 billion); JPMorgan ($3.7 billion); Franklin Templeton ($3 billion); Wells Fargo ($1.7 billion); BlackRock ($1.4 billion); Northern Trust ($1.3 billion); T. Rowe Price ($1.2 billion); and Goldman Sachs ($1.1 billion).

The SI report can be downloaded from www.sionline.com .