Highlights from the Lipper Fund Flows Insight Report for May 2012

(June 1, 2012)

  • Investors Put $20.6 Billion Net (deposits minus withdrawals) Into Bond Mutual Funds during April.
  • Investors Put $2.4 Billion Net Into Stock and Mixed Asset Mutual Fund during Aprils.
  • $23 Billion In Net Funds Moved Into Stock and Bond Funds In April Compared to $36.2 Billion in March.

Investors clearly preferred investing in bond to stock funds in April, by a factor of 9 to 1. Could the relative performance of the market during that time motivated the preference for bond funds?

In April, the Dow Jones Industrial Average just managed to stay in the positive territory, gaining 0.016% for the month. However, both the S&P 500 and the NASDAQ Composite slipped in the red, losing 0.75% and 1.46%, respectively. The S&P 500 however, had gained an impressive 3.13% in March.

In April, the Pimco Total Return Fund (the largest bond fund) had a nice gain of 1.46% (net of fees). The previous month the fund gained an negligible 0.01%.  (read our special report: Are investors in the PIMCO Total Return Fund missing out?) While March was a better month for stocks, April was a better month for bond returns. In April , the flow of money into bond funds appears to be correlated with superior performance of bonds to stocks and improved performance compared to the previous month.

 

What type of bond funds are investors moving money into in April?

  • Taxable bonds funds gained $18.6 Billion while non-taxable gained only $2 billion.
  • Long Term bond funds gained $14.9 Billion while intermediate and short-term bond funds gained $5.7 Billion.
  • High Current Yield Funds and Short Investment Grade had major net inflows, $2.2 billion and $2.5 billion respectively

Investors are expressing strong preferences for longer term bond and taxable bond funds.

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