The global mutual fund industry is on pace for $850 billion in net inflows to stock and bond mutual funds in 2010, according to Strategic Insight. More than half of the flows will go to funds domiciled outside the U.S., the research firm said.
This would be a 4% decrease from the $890 billion that went into stock and bond funds worldwide in 2009, but ahead of the outflows in 2008 and the inflows of around $800 billion in each of 2006 and 2007.
“Those figures mark a strong resumption of fund investing around the world after the paralysis-induced shocks of 2008,” Strategic Insight said.
“The fact that long-term mutual funds are drawing more inflows post-crisis than pre-crisis is not surprising,” said Strategic Insight Director of Research Avi Nachmany. “The global financial crisis underscored the value of mutual funds’ liquidity, transparency and accessibility. And, post-crisis, fund providers have been introducing more flexible and global funds, as well as more holistic solutions to meet evolving investor demands. Thanks to these trends, there is rising acceptance of the mutual fund around the world as the savings vehicle of choice.”
However, more than 60% of long-term fund flows are going to bond funds, and Strategic Insight does not see that demand abating for some time.
“We are unlikely to see broad demand for equity funds until we see sustained job growth and other signs that the global economy, especially the U.S., is on surer footing,” said Lauren Fox, senior research analyst at Strategic Insight.