According to Strategic Insight, an Asset International company, in May, stock and bond funds, including ETFs, attracted $56 billion of net inflows. Mutual funds (excluding ETFs) drew in $35 billion of net flows, driven by nearly equal demand for stock and bond funds.
Demand for U.S. equity funds lessened to $5 billion for the month, while international equity funds saw an uptick in flows to $11 billion. Taxable-bond funds sustained another month of near $20 billion in net demand, bringing year-to-date net intake to $115 billion.“The fund industry will continue to benefit from two Great Rotations, not just the oft-quoted bond-to-stock transfers. One rotation is the nation’s cash hoards shifting to income vehicles. The other rotation more broadly is from conservative holdings, such as uninvested cash and bonds, to a more rewarding long-term capital appreciation portfolio—not just opportunistic investing. There are many trillions of dollars involved in each of these great rotations unfolding in the coming years,” said Avi Nachmany, Strategic Insight’s director of research.
Target-date mutual fund assets increased to $543 billion in May, drawing in another month of flows in excess of $5 billion. Year-to-date through May, target-date funds enjoyed net flows of $34 billion, and provided investors with a weighted average return of 7.3%. On a one-year basis, target-date investors benefited from an 18% weighted average return.
Mutual fund share classes designated specifically for defined contribution retirement plans (often referred to as R-shares) grew to $615 billion across strategies. Year-to-date through May, R-shares netted $23 billion in flows across target-date ($9.6 billion) and single asset class ($13.1 billion) strategies.
Exchange-traded products (including exchange-traded notes) attracted $21 billion of net intake in May, nearly triple the prior month’s net intake. Stock-oriented products accounted for $17 billion of ETP inflows (inflows elsewhere were matched by net redemption among gold and emerging market ETFs), while taxable-bond ETPs attracted $4 billion of monthly net flows.More about Strategic Insight is at www.sionline.com.