Data from Morningstar shows 72 of 93 open-end categories recorded inflows. Combined with inflows of $28.6 billion for exchange-traded funds (ETFs), it was by far the largest one-month inflow on record. All asset classes and each of the top 10 open-end fund providers saw long-term fund inflows.
Continuing a trend that has persisted for more than four years, and demonstrating that investors have not abandoned fixed income, the intermediate-term bond category had the greatest inflows in January with $10.5 billion. Taxable-bond funds led all asset classes with inflows of $31.0 billion in January, followed by international-stock funds, which took in $18.4 billion during the month.
“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. “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. 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.”
Vanguard topped all fund families in January with overall inflows of $17.6 billion, 87% of which flowed to the firm’s passive lineup. Vanguard funds swept the top three spots for fund-level inflows, led by Vanguard Total Bond Market’s inflows of $4.3 billion. American Funds saw its first monthly inflow since June 2009.The complete report is at http://www.global.morningstar.com/janflows13.