Investors showed strong confidence in long-term mutual funds in the second quarter, boosting sales in bond and stock funds by $136 billion, Strategic Insight reported. It was the strongest quarter for sales since the first quarter of 2007, when long-term mutual funds drew nearly $150 billion.
“Despite continued economic uncertainty, the mutual fund industry has enjoyed remarkable stability relative to other financial services sectors,” noted Avi Nachmany, director of research at Strategic Insight. “Stock and bond funds are the core of the fund industry, and the robust inflows to both in the second quarter are a testament to the long-term perspective of most fund investors.”
The biggest seller was bond funds, which drew net inflows of nearly $90 billion. Equity funds took in $47 billion, with one-third of that money going into international stock funds.
Commenting that investor confidence has been slowly rising since the market hit bottom on March 9, Strategic Insight Senior Research Analyst Loren Fox said, “Including June, equity funds have now enjoyed three straight months of solid inflows. Investors are tiptoeing back into riskier asset classes, and while the recent stock market retreat slowed equity fund inflows, they would rebound if the second half of 2009 experienced an economic recovery.”