Investments into bond fund are on pace this year to exceed 2011 and 2010 results, according to the market research firm Strategic Insight.
Bond funds gained another $32 billion in September, and are projected to grow to more than $300 billion in net inflows for the full year, exceeding the 2010 and 2011 pace, the research shows.
Investors in stock funds remained cautious, though, despite stock markets double-digit returns so far in 2012. Equity fund shareholders are taking some of their recent profits “of the table,” as stock fund redemptions during September were at the highest monthly level this year, climbing to $17 billion, the report states.
“Insatiable demand for income and a lingering, semi-permanent state of investment anxiety continue to drive the choices for most mutual fund investors,” says Strategic Insight Director of Research Avi Nachmany. “We anticipate recent investors’ preference to persist in the coming months, but that a slow rotation towards stock funds may emerge in 2013.”
Asset allocation funds attracted nearly $1 billion in net flows during September, bringing the quarterly net intake to $3.8 billion, the report adds.
Money-market funds moved into net redemptions during the month of $5.5 billion, bringing redemptions in such funds to nearly $150 billion so far in 2012.
Exchange-traded products benefitted from $36 billion of September net intake, bringing total ETF net inflows to nearly $130 billion for the first nine months of 2012, already exceeding the full-year gain in each of the past three years.
U.S. large and small cap funds, emerging market funds, gold and real estate, and high-yield corporate bonds were also among the categories gaining inflows, while high-quality bond categories experienced modest redemptions.
About 60% of ETF assets and flows are now sourced from individual investors while 40% are held by institutional investors, the report states.