Investing November 6, 2006

Worldwide Mutual Fund Inflows Down in Second Quarter

November 6, 2006 (PLANSPONSOR.com) - Mutual fund assets worldwide increased 1.6% to $19.41 trillion at the end of the second quarter of 2006, according to data from the Investment Company Institute (ICI).
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ICI data showed new cash flow to all funds worldwide fell to $206 billion in the second quarter, from $437 billion in the first quarter of 2006. Compared to the first quarter, inflows to long-term funds fell by two-thirds to $135 billion, with net flows down for all asset categories.

Flows to American and European equity funds dropped substantially as second-quarter money market fund inflows more than doubled to $71 billion, fueled substantially by US money market inflows, ICI said.

Most reporting countries had positive net cash flow in the second quarter of 2006, however, growth in assets reported in US dollars was boosted by depreciation of the dollar. As an example ICI said mutual fund assets in Europe on a US-dollar-denominated basis increased 3.6%, compared with a 1.4% decline on a Euro-denominated basis.

Equity fund flows worldwide slowed to $73 billion in the second quarter, compared with $246 billion in the first quarter. The Asia/Pacific and African regions accounted for $41 billion of the inflows. After topping $200 billion in the first quarter of 2006, inflows in the Americas and Europe fell to $32 billion.

Balanced fund flows were strong in the second quarter, hitting $48 billion, with the bulk of the inflows, $35 billion, attributable to Europe. Bond funds registered a $5 billion outflow in the second quarter of 2006 after experiencing a $65 billion inflow in the first quarter. Net inflows to bond funds in the Americas were $13 billion in the second quarter, but were offset by outflows in the European, African, and Asian and Pacific regions.

Of the $71 billion in money market fund inflows, the United States accounted for $58 billion. Flows outside the US weakened, falling from $23 billion in the first quarter to $13 billion in the second quarter.

As of June 30, 2006, 47% of worldwide mutual fund assets were equity funds. Bond funds made up 19% of worldwide mutual fund assets and money market funds made up 18%. Balanced/mixed fund assets represented 9% of total worldwide mutual fund assets.

More information can be found at www.ici.org .

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