Before we can position ourselves for success in the new year, we must assess who won and who lost last year.

The fund industry returned to good health in 2013. Long-term mutual fund and ETF flows totaled $453 billion. Combined with market appreciation, industry assets hit a record $12.6 trillion, excluding money market funds. A clear signal of the return of investor confidence was the 33% return for the S&P 500, along with a collapse in gold prices. Gold is often seen as a disaster hedge that is held out of fear. Investor confidence in the economic recovery pushed interest rates higher in anticipation of Federal Reserve action, sparking outflows from core bond funds and a rotation into equities.

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