Morningstar: Record breaking fund flows in 2013

Morningstar has reported mutual fund asset flows for December, as well as the full-year 2013. Their estimates reflect strong growth, driven by an improving global economy and resulting improved investor sentiment.  According to Morningstar, a net inflow of $265.8 billion during 2013 produced record breaking long-term mutual fund assets of $10.9 trillion.

Other occurrences of note in the report include the end of a multiyear investor preference for bond funds over equity funds. During 2013, equity funds showed their largest inflow since 2000 but only 3% growth based on percentage of assets. There was also a significant reduction of inflows to taxable-bond funds, down from $268.1 billion in 2012 to only $21.0 billion during 2013. Taken together, taxable and municipal bonds showed their first year of outflows since 2004.

Morningstar reports that bank loan and foreign large blend bonds—both fairly new bond categories—were among the fastest growing in 2013. Each type of bond showed inflows of more than $50 billion. Meanwhile, intermediate term bonds redeemed $78.9 billion—the largest net redemption of any category in 2013.

Among mutual fund companies, Vanguard gained nearly a full percentage point of the market share for 2013 and their index funds ranked first, second, and third in the list of funds with greatest annual inflow. Vanguard’s 2013 inflow ($74.6 billion) was more than three times that of other firms. PIMCO, American Funds, Columbia, and Janus all reflected significant outflows. This is especially notable for PIMCO, as, a year ago, it showed the second largest inflows of 2012. American Funds has just completed its sixth consecutive year of net outflow.

For Morningstar’s full report, visit http://corporate.morningstar.com/US/documents/AssetFlows/AssetFlowsJan2014.pdf.