Worldwide Fund Flows Decline for Q307

Net cash flow to all funds worldwide was $319 billion in the third quarter, falling below $400 billion for the first time since the third quarter of 2006, ICI said. Inflows to long-term funds were down nearly 90% to $37 billion in the third quarter from $294 billion in the second quarter.

Equity fund flows worldwide were $31 billion in the third quarter, down from $103 billion in the second quarter. The Asia/Pacific region accounted for $48 billion of equity flows and the Americas posted $14 billion of equity flows. Europe registered a net outflow of $31 billion from equity funds in the third quarter, compared to a net outflow of $6 billion in the second quarter.

Bond funds experienced $51 billion in net outflows in the third quarter of 2007, compared to net inflows of $98 billion in the second quarter of 2007. Net outflows from bond funds were $63 billion in Europe in the third quarter, while net inflows to bond funds were $14 billion in the Americas, down from $65 billion in the second quarter.

Worldwide inflows to balanced funds were $23 billion in the third quarter, with $17 billion attributable to the Americas.

Money market funds worldwide fared best in the third quarter of 2007 with a net inflow of $282 billion – about twice as high as the rate of inflows over the previous four quarters.

Net flows into money market funds in the United States jumped to $312 billion in the third quarter from $100 billion in the second quarter, while the rest of the world experienced net outflows from money funds. European money market funds had net outflows of $27 billion in the third quarter versus net inflows of $35 billion in the second quarter.

At the end of the third quarter of 2007, 49% of worldwide mutual fund assets were in equity funds. The asset share of bond funds was 16% and money market funds held 18% of the total. Balanced/mixed fund assets represented 10% of the total.

Growth in total net assets in the third quarter of 2007 was boosted by two factors, ICI noted. The third quarter was the first time China has reported mutual fund assets - boosting the growth total from 4.5%, if it had been excluded, to 6.2%.

Growth in assets reported in U.S. dollars was augmented by depreciation of the dollar. For example, ICI said, mutual fund assets in Europe on a U.S.-dollar-denominated basis increased 2.9%, compared to a decline of 1.9% on a Euro-denominated basis.

On a U.S.-dollar-denominated basis, asset levels increased in all investment categories. Assets of equity funds grew 5.6% to $12.6 trillion at the end of the third quarter of 2007. Bond funds were up 2.1%, money market funds grew 9.3%, and assets of balanced/mixed funds increased 11% to $2.6 trillion at the end of the third quarter.

The ICI data is here .