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Mutual Funds Off to Strong Start


U.S. mutual funds and ETFs drew in $17.9 billion the week ended Jan. 30, wrapping up the first month of 2013 with total net inflows of $51.7 billion.

Equity funds especially enjoyed a strong January, posting their best four-week inflows in 17 years, Tom Roseen of Lipper reported. Investors in all categories seem encouraged by signs of improvement in the global economy, the dissipation of political and market uncertainty, and strong 2012 and January 2013 market performance, Roseen said. 

"On Friday, January 25, the S&P 500 Index had strung together its eighth consecutive day of plus-side performance, pushing the index to its first finish above 1,500 since late 2007 and its longest winning streak since November 2004. Investors cheered signs of improvement in the global economy after China, the U.S., and the Eurozone showed improvement in their purchasing managers’ indices, despite news that U.S. new home sales fell in December," Roseen explained.  

The coast isn't clear for the market, with declines in pending home sales and GDP growth and the aggressive bond-buying initiative by the Federal Open Market Committee causing a "slight market pullback" for the week ended Jan. 30. Nonetheless, investors for the week remained net purchasers of fund assets. 

Equity funds, including ETFs, took in $12.7 billion for the week, the second largest weekly net inflows since Sept. 14, 2011. For the month of January, equity funds saw inflows of $34.2 billion — equity funds’ best four-week inflows since the four-week period ended January 10, 1996.

Equity ETFs experienced net inflows for the first week in three weeks with $6.9 billion. Meanwhile, their equity mutual funds scored their fourth consecutive week of net inflows and their greatest four-week inflow total since the period ended April 12, 2000. Equity mutual funds saw flows of $5.8 billion for the week and $20.7 billion for the month.  

Taxable bond, municipal debt, and money market fund flows also remained positive, taking in $3.7 billion, $0.6 billion and $0.9 billion, respectively

Notable equity ETF performers for the week ended Jan. 30 include SPDR S&P 500 ETF, which took in the largest net inflows of the category for the fourth week of January after three weeks of outflows. SPDR S&P 500 drew $4.6 billion, while Select Sector Energy SPDR and iShares: MSCI USA Minimum Volatility Index ETF trailed behind with $0.4 billion and $0.3 billion, respectively.

Excluding ETFs, investors in general were "much more risk-seeking" given the dissipation of political and market uncertainty and strong 2012 and January 2013 performance, Roseen said.. 

Domestic equity funds enjoyed net inflows of $2.9 billion, while nondomestic equity funds took in some $2.8 billion. After a terrible 2012, domestic large-cap funds scored the largest draw of net new money with $1.5 billion, while on the nondomestic side the emerging markets funds classification continued to dominate with the largest net inflows ($1.2 billion).

Conventional mutual fund investors invested $2.9 billion into the taxable fixed income funds space, including $1.4 billion in corporate investment-grade debt funds and $0.8 billion into flexible income funds. 

Municipal debt funds, excluding ETFs, enjoyed their fifth consecutive week of inflows, taking in $0.6 billion.

 


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