Stock and bond funds, including exchange traded funds, maintained a strong pace of net inflows in April, according to fund industry researcherStrategic Insight(SI). The funds netted nearly $50 billion in the month.
In the first four months of 2013, stock and bond funds and ETFs saw net flows up nearly 50% from the same four months of 2012, taking in $293 billion.
Avi Nachmany, SIs director of research, identified two trends responsible for these numbers. Overall, we observe two great rotations in the mutual fund industry (not just one). One, from $10 trillion+ zero-yield cash to other income vehicles, mostly bond funds. Another, from un-invested money to capital appreciation vehicles, as investors re-engage and move up their personal risk curve. Both trends are likely to continue.
The April net flows break down as follows: stock and bond funds took in $39 billion, bringing year-to-date total to $232 billion; U.S. equity funds scooped up $9 billion in April, bringing annual intake to $58 billion, ETFs attracted $8 billion of net flows, bringing the 2013 total to $61 billion.
SI also included numbers on retirement specific products. Target date mutual funds scooped up $28 billion of net flows during the first four months of 2013. Lifecycle mutual funds (defined as target date and target risk) assets grew to $784 billion in April. Assets invested in share classes specific to defined contribution plans (R-Shares) grew to $596 billion across strategies.
Bridget Bearden, head of SIs defined contribution research, attributed the increase to a focus on distribution by the providers. As 401(k) plans and other defined contribution plans cement themselves as the default retirement savings vehicle for most Americans, product providers focus on distributing to these plans has become more pronounced.