Investors are diversifying and how. More than two-thirds of stock and bond net inflows in 2004 were part of a structured asset allocation program, according to research firm Strategic Insight.
The trend of diversifying across asset classes is increasing at a fervent pace, experts say. Funds-of-funds, for instance, are gaining popularity as investors move away from "starred" funds and single company stocks. Last year, funds-of-funds tapped $60 billion in net new flows, nearly twice 2003 inflows and four times 2002 inflows.
Similarly, mutual fund wrap program inflows rose above $50 billion last year, and single funds structured for asset allocation added $30 billion in 2004 inflows.
"This accelerating shift from single-fund exuberance, and often, disappointment, reflects a secular change in investors' attitudes and bodes well for long-term satisfaction, expectation management and asset stability," said Avi Nachmany, Strategic Insight's director of research.