Morningstar Reports Long-Term Mutual Funds Nearly Double in August

 September 14, 2011 ( – Morningstar reported estimated U.S. mutual fund and exchange-traded fund asset flows through August 2011.

Redemptions from long-term mutual funds nearly doubled to approximately $32.5 billion in August after outflows of about $17.1 billion in July. August marked the most severe mutual fund outflows since November 2008. U.S. ETFs collected assets of just $947 million in August following July’s inflows of $17.2 billion. Although August’s inflows were meager, U.S. ETFs have realized only a single month of outflows in the trailing 12.

Despite August market volatility, U.S. stock outflows fell to $15.5 billion during the month after redemptions of $22.9 billion in July. As an indication that risk aversion has spread to fixed income, investors pulled $12.0 billion from taxable-bond funds in August. Bank loan and high-yield bond funds were hardest hit, with outflows of $7.3 billion and $5.1 billion, respectively.

With assets fleeing all of the major asset classes during August, investors found refuge of a sort in money market funds, which saw inflows of $74.8 billion. This total was the biggest monthly inflow for such funds since January 2009, and partially reversed June and July’s combined $150 billion in outflows.

Modest outflows continued for international-stock and balanced funds in August. The asset classes experienced respective outflows of $2.9 billion and $2.3 billion.

U.S. stock ETFs, which typically drive overall ETF flows, saw inflows of just $394 million in August. On the other hand, International stock ETFs lost $5.5 billion during the month, the greatest outflow for any ETF asset class. This outflow also marks the largest monthly net redemption for international-stock ETFs in the past three years.

Taxable-bond offerings, which added another $4.3 billion in August, saw greater inflows than any of the other ETF asset classes during the month. Commodities ETFs experienced outflows of nearly $2.0 billion in August.

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