Some mutual fund industry analysts are questioning the timing of three new bond funds from American Funds, the Los Angeles Times reports.
American Funds has been hit with outflows from its stock funds ever since investors began fleeing equities in 2008. Today, the firm still has $770 billion in stock funds, but only $185 billion in fixed-income assets, which have become far more popular among investors of late.
In the first 10 months of this year, investors redeemed $39 billion from American Funds’ offerings, about 4% of the firm's assets, and in all of 2009, they withdrew $25.3 billion. This is in stark contrast to the years 2004 to 2007, when American Funds netted more than $73 billion a year in inflows. Bond specialist PIMCO, on the other hand, took in $66.5 billion in inflows year-to-date through October.
American Funds insists, nonetheless, that the fixed income funds have been years in the making and are not catering to current investor sentiment. Indeed, American Funds is well known as a company that has avoided short-term fads, like the dot-com mania.
This week, American Funds is launching a mortgage-bond portfolio and a fund that will invest in tax-free New York municipal bonds. In February, the firm is launching an international balanced fund that will invest in a mix of stocks and bonds.
Morningstar analyst Kevin McDevitt implied that the new funds could sell well since American Funds’ current stock focus is “the worst place possible in terms of investor sentiment now.”