The Investment Company Institute (ICI) has reported that total mutual fund flow, which includes all stock and all bond funds, had another good week to open the month of March with an above average inflow from investors.
The ICI has reported that $11.8 billion came into all mutual funds for the week ending March 6th in a continuation of strong demand from investors. Mutual funds, primarily used by retail investors, experienced their 9th consecutive weekly inflow which was above the 12 week average flow of $10.1 billion. While the weekly result was far from the high for the year (which was $26.5 billion for the first week of 2013), the result was the highest inflow in two weeks.
Of the $11.8 billion that came into all mutual funds last week, $2.9 billion was collected by stock funds, with $2.4 billion going to hybrid funds (blended funds of both stocks and bonds), and $6.4 billion scooped up by bond funds. Investors have had a very balanced allocation thus far in 2013 with bond funds collecting $58.6 billion in new investor funds versus all stock funds which have gathered $58.3 billion. To compare this asset allocation to a year ago, investors in the first 9 weeks of 2012 bought just $2.1 billion in stock funds versus $68.2 billion in bond funds. While there has been speculation in the financial press of a “great rotation” from bonds and into stocks to start the year, our research finds that investors are moving out of money market funds and into “risk” assets including both bonds and stocks. A rotation by investors will likely involve marginal inflow or slight outflows within bond funds and disproportionate inflows into stocks funds. Currently, investor asset allocation amongst stocks and bonds is balanced, implying no rotation as of yet.
The public asset managers with the biggest mutual fund franchises of total client assets that would benefit from both strong bond and stock flows are Legg Mason (LM), Franklin Resources (BEN), and Invesco (IVZ).