$226 Billion in Mutual Fund Inflows Nearly Making Up for 2008’s Redemptions

Open-end mutual funds have pulled in more than $226 billion through August, bringing them close to making up for ground lost in the second half of 2008, Morningstar said in a report.

For the month of August alone, investors put $54 billion into U.S. open-end mutual funds, representing the largest inflow since February 2007. “While that’s certainly a positive for fund firms, it doesn’t necessarily signal renewed enthusiasm for equities,” said Sonya Morris, an editorial director with Morningstar. “As has been the case throughout much of the year, the vast majority of inflows have been to fixed-income funds.” Municipal bond funds made up another 20% of flows.

Just as bond funds have benefited from investors' current decisions, so have individual funds. PIMCO Total Return, in particular, was the top-selling fund throughout 2009. The fund had its best month yet during August, taking in almost $5.5 billion in flows. It now holds a 13% share of the taxable-bond mutual fund market, and weighs in at $177.5 billion in assets. Its current size makes the PIMCO Total Return almost twice as big as the next-most-popular fund, Vanguard Total Stock Market, which has $93 billion in total net assets.

Franklin Templeton has also capitalized on the recent popularity of bond funds. Templeton Global Bond reaped $1.3 billion in August, and more than $5 billion so far this year. That helped the company offset year-to-date outflows from Templeton Growth and Mutual Shares, of $1.4 billion and $1.1 billion, respectively.