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Mutual Funds Reap $150B YTD: Strategic Insight


Weighing heavily towards value versus growth, mutual fund stock investors added close to $150 billion to their holdings during the first six months of 2005, according to the New York-based research firm Strategic Insight.

Stock prices, meanwhile, traded in a narrow range and gained only modestly, the firm said.

"So far in 2005, inflows to international equity funds matched those of U.S. equity funds, and such diversification efforts are expected to continue, in our view, despite recent strengthening of the U.S. dollar," said Avi Nachmany, director of research, Strategic Insight.

Further reflecting a trend towards prudent asset allocation, Nachmany added, inflows to funds-of-funds exceeded $35 billion in the first half of 2005. That performance eclipses the six-month pace set last year, when funds-of-funds went on to enjoy record full-year inflows of $60 billion.

"Overall, as was the case in 2004, some type of asset allocation overlay has driven about two-thirds of stock fund inflows this year," said Nachmany, who thinks these trends will persist if financial market stability continues.

In terms of style, value dominated equity fund flows for the first six months and expectations are that this trend will continue.

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