Bond inflows slow - Are investors hungry for stocks again?

Morningstar recently reported estimated U.S. mutual fund and exchange-traded fund asset flows through November 2010. After contributing $26.8 billion to long-term mutual funds in October, investors added just $2.7 billion in November. While the pattern of outflows for U.S. stock funds continued, investors also lost enthusiasm for fixed-income funds. Money market funds were the direct beneficiaries with inflows of $24.7 billion, their best month since January 2009. U.S. ETFs saw inflows of $10.3 billion in November, pushing year-to-date inflows to $95.6 billion and total industry assets to $951.5 billion.

Additional highlights from Morningstar's report on mutual fund flows:

• Inflows for taxable-bond funds reached just $6.1 billion in November versus $21.0 billion in October, the smallest monthly inflow for the asset class since May. After 22 consecutive months of net inflows, municipal-bond funds saw net outflows of $7.6 billion in November. This reversal comes after investors added nearly $105.6 billion to the asset class from January 2009 through October 2010 and marks the worst month for municipal-bond funds in terms of net outflows except for the $8.0 billion redeemed in October 2008 during the credit crisis.

• Rising rates and currency swings contributed to a tough month for emerging-markets bond and world-bond funds, some of the more aggressive areas of the bond market. Nevertheless, money continued to flow to emerging-markets bond funds. These offerings have collected more than $13.7 billion in 2010, and total assets have nearly doubled over the last 12 months to $36.8 billion.

• Large-growth funds had the biggest outflows of any Morningstar category this year, losing $43.5 billion.

• Investors pulled $1.0 billion from Vanguard funds in November, the firm's first month of long-term fund outflows since October 2008. Equity-oriented families including American, Fidelity, and Columbia also continued to suffer outflows. Despite redemptions of $1.9 billion from PIMCO Total Return, the fund's first month of net outflows in two years, PIMCO still took in $1.1 billion during November.

To view the complete report, please visit http://www.global.morningstar.com/novflows10.