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Mutual Funds' Gains Lowest Since Credit Crisis


Investors pulled more than $125 billion from mutual funds that invest long-term in stocks last year, according to the latest data released by the Investment Company Institute. Of that, $5.2 billion got pulled in the week leading up to New Year's Eve.

All told, $2.6 billion was withdrawn from mutual funds of all types in the week ended Dec. 28. About $4.0 billion got pulled out of domestic equity funds and another $1.2 billion out of funds that invest in international stocks.

Investors put $2.2 billion into bond funds and $389 million into funds that invest in both stocks and bonds.

For the year, only about $32.2 billion was added to mutual funds of all types, according to ICI historical data.

That was the worst performance since 2008, the year that collapse of the subprime mortgage market led to a global credit crisis and the "breaking of the buck" in money market mutual funds.

That year, investors yanked $199.6 billion out of mutual funds. But they put in $390.0 billion in 2009 and $227.8 billion in 2010.

 

ETF Growth Shrinks in 2011

Investors added $117.6 billion to their holdings in exchange-traded funds in 2011. That is almost identical to 2010, when they added $118.7 billion, and 2009, when they added $119.4 billion. But the value of their holdings only increased $51.4 billion, because the value of their shares fell, according to the Exchange Traded Fund Association.

By year's end, the overall value of those holdings reached $1,060.2 billion, up from $1,008.7 billion, according to statistics compiled by the ETF Association and released Thursday morning.

That represented growth in value of 5.1% for the year, a far cry from prior years. In 2010, the value of assets grew 27.5% due to additions and appreciation, from $790.9 billion in 2009. In 2009, assets grew 46.7%, from $539.0 billion.

 

Utility, Real Estate Funds Best Investments in 2011

The best-performing mutual funds of 2011 invested in large-cap, dividend-paying stocks-putting utility, real estate investment trust, healthcare and consumer staple funds at the top of the heap.

Through Dec. 28, the best-performing mutual fund categories were:

1.) Utility Funds-9.7%

2.) Real Estate Funds-6.9%

3.) Healthcare Funds-6.6%

4.) Consumer Staples Funds-4.5%

 

TCW, Gundlach Settle Suit

The multi-million dollar lawsuit that Trust Company of the West brought against former star portfolio manager Jeffrey Gundlach, who TCW fired in 2009 and who then formed his own competing firm, DoubleLine Capital, was settled out of court. The two firms would not disclose terms of the settlement, although the lawsuit, which accused Gundlach and his associates of stealing trade secrets, was in the hundreds of millions of dollars.