Strategic Insight: '04 Fund Flows Set Record

December 21, 2004 ( - Stock and balanced mutual fund 2004 inflows reached $330 billion - setting a new record level as they bested the $307 billion from 2000, Strategic Insight said.

A news release said year-end mutual fund assets should near $8.5 trillion (open-end, closed-end, funds underlying variable annuities, and index mutual funds including ETFs), up from $7.9 trillion at year-end 2003, Strategic Insight said.

Meanwhile, International / Global equity funds experienced the most dramatic acceleration of inflows during the year.    For such investments, inflows could eclipse $100 billion for all of 2004 (versus $41 billion during 2003 and $66 billion during 1994, the prior record flow year).    Strategic Insight said it expects a greater allocation to non-US equity funds to persist in 2005.

Among other 2004 highlights, according to Strategic Insight:

  • Industry aggregate redemption rates have been the lowest in decades
  • Fund-of-funds’ inflows eclipsed $60 billion (versus $37 billion in 2003 and $19 billion in 2002)
  • Mutual funds underlying variable annuities captured roughly $45 billion in 2004 inflows, their best level since 1999
  • Closed-end fund IPOs added $22 billion in mutual fund inflows in 2004 (versus $28 billion in 2003 and $16 billion in 2002)
  • Exchange Traded Funds’ (ETF) 2004 inflows may near $50 billion, eclipsing the roughly $43 billion of index funds not structured as ETFs
  • Sectors with big 2004 inflows: Natural Resources ($12 billion); Real Estate ($10 billion), Global Asset Allocation ($10 billion) and Floating Rates Bond Funds ($13 billion).

“This record of equity fund inflows reflects extraordinary investment and personal confidence among individual investors in America, and should signal further interest in such investments during 2005, assuming no significant decline of stock price levels,” said Avi Nachmany, Strategic Insight’s Director of Research, in the news release.

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