Morningstar Direct SM Fund Flows Update

Transcription

1 November 2011 Data Morningstar Direct SM Update U.S. Open-End Funds Also inside: Extended tables... 4 Fear On by Kevin McDevitt, CFA, Editorial Director November was another "risk-off" month for mutual fund investors with $6.3 billion in long-term outflows. With one month of 2011 to go, long-term inflows for the year to date are down 70% from 2010's $244 billion for the full year. U.S.-stock funds once again did most of the damage with $12.5 billion in outflows, even though the S&P 500 Index was flat for the month. International-stock funds fared even worse in relative terms with $4.3 billion in outflows, the asset class' worst showing since May Investors instead turned to the perceived safety of bond funds, shoveling $10.2 billion into taxable-bond offerings. They also contributed nearly $3.1 billion to municipal-bond funds, as that group's steady recovery continued. Municipal-bond funds had their highest inflows since August Money market funds provided another haven, as they collected $46.1 billion in new money, one of their greatest hauls in three years. Estimated Net Flows $Mil November 2011 YTD 2010 U.S. Stock (12,509) (74,527) (74,993) International Stock (4,294) 8,387 42,407 Balanced (4,634) 12,071 12,433 Taxable Bond 10, , ,916 Municipal Bond 3,052 (15,702) 12,047 Alternative 1,647 12,801 22,920 Commodities ,201 12,376 All Long Term (6,319) 74, ,106 Money Market 46,139 (135,183) (476,255) Source: Morningstar Direct Bond Funds: Chasing Safety and Returns Taxable-bond funds dominated the other asset classes with nearly $10.2 billion in inflows. Unlike earlier in the year when investors seemed to gravitate toward credit-oriented categories in search of yield, conservatism carried the day in November. The intermediate-term bond category, in which many core bond holdings are found, collected $8.5 billion in new assets. DoubleLine Total Return Bond was one of the primary beneficiaries with nearly $1 billion in inflows. Vanguard Total Bond Market II Index and Vanguard Total Bond Market Index fared even better with nearly $2 billion in combined inflows. Although no category came close to the intermediate-term bond haul, conservative-bond categories dominated the top-10 ranking. Intermediate-term bond was followed by inflation-protected bond, muni-national intermediate, shortterm bond, and the conservative-allocation category. Municipal-bond funds had their best month overall since August The asset class has been increasing in popularity since it bottomed in December last year. To learn more about Morningstar Direct, visit us at this link. For weekly updates about the fund industry, check Fund Times on Morningstar.com each Thursday afternoon. Data Notes: The figures in this report were compiled on Dec. 12, 2011, and reflect only the funds that had reported net assets by that date. The aggregated figures do not include Calamos Morningstar, Inc. All rights reserved.

2 While risk-aversion is likely part of the push into traditionally low-risk bond categories, investors may be chasing returns to some extent, too. So far in 2011, investors haven't had to compromise between risk and return. Municipalbond and government-bond categories have generally had the best returns of any asset class. That's perhaps due to the fact that these asset classes are no longer considered low-risk, in light of concerns over the country's growing debt burden. At least for one year, though, investor pessimism seems to have gotten ahead of the near-term risk, and long-term government and muni bonds have unexpectedly enjoyed the best performance. On the other hand, credit-oriented categories such as high-yield bonds and bank loans have seen their popularity plummet as returns have stagnated. Although high-yield funds did collect a record $8.9 billion last month, that looks like an anomaly. In November, investors pulled nearly $1.2 billion from these funds. Bank-loan funds, which have seen declining interest since January's record $5.5 billion in inflows, had nearly $700 million in outflows. Emerging-Markets Flows Decouple The exception to this risk-aversion remains emerging markets. While the performance of emerging-markets assets hardly seems unrelated to broader global ills, investors have been treating them as if they're in their own universe. Even though diversified emerging-markets stock funds have fallen 19.5% for the year to date through November, they continue to attract inflows. That category attracted nearly $740 million for the month. While the pace of inflows has certainly slowed this year, November still marked the category's ninth consecutive month of positive flows. The gap between performance and flows isn't quite as wide with emerging-markets bond funds, but it's clear nonetheless. The average fund in the category gained 1.9% for the year to date through November, but this is well behind (in bond-fund terms) the 5.1% average return turned in by intermediate-term bond funds. Yet, the emergingmarkets bond category still welcomed another $793 million in new money. Since August 2009, the category has had only one month of net redemptions. Bucking this trend is Templeton Global Bond, which, although it lands in the world-bond category, has significant emerging-markets exposure. With close to $500 million in outflows, the fund had its first net redemptions since November That's not surprising considering the fund's poor year-to-date performance. Its 2.4% loss through November is among the worst in the world-bond category. Stock Funds: Will This Ever Turn Around? The steady flow out of U.S.-stock funds continued much as it has for months. Outflows were consistent across the major categories, with large-cap categories again getting hit the hardest. Large-growth funds had about $4 billion in outflows with punching bag American Funds Growth Fund of America alone surrendering $3.3 billion of it. Other than diversified emerging markets, the story was similar for international-stock funds. Foreign large value was the only category with notable inflows (about $300 million). By contrast, the foreign large-blend and world-stock categories shed nearly $2.6 billion and $1.9 billion, respectively. Actively managed stock funds have taken the brunt of redemptions across the board, but the contrast between actively and passively managed funds has been especially stark in the foreign large-blend category. Actively managed funds lost $3.7 billion in November while their passively managed counterparts collected nearly $1.2 billion. The chasm is even wider in the year to date, as actively managed funds have suffered through about $19.8 billion in redemptions, while passively managed funds have absorbed $15.7 billion. Vanguard Total International Stock Index has been a notable success story. The fund took in over $830 million in November and now has recorded more than $12 billion for the year to date. No category competitor comes within $10 billion of this performance. If investors have added at all to stock funds in 2011, they have tended to stick with those that are passively managed Morningstar, Inc. All rights reserved.

3 Fund Family Top-10 Open-End Fund Families ranked by Est. Net Flow Excludes money markets and funds of funds Total Net Assets $Bil Market Share % Nov 2011 Estimated Net Flow $Mil One-Year Organic Growth Rate TIAA-CREF , DoubleLine , JPMorgan , Advanced Series Trust , T. Rowe Price DFA Federated MainStay Wells Fargo Advantage Lord Abbett Source: Morningstar Direct Few of the usual suspects are found among the firms receiving the most inflows in November. While Fidelity and American Funds continue to endure outflows, PIMCO and Vanguard didn't fare that much better. That's somewhat surprising given the two families' robust bond-fund lineups and the healthy flows into such offerings. In PIMCO's case, its offerings have fallen out of favor to some extent following the firm's botched call on U.S. Treasuries. Led by flagship PIMCO Total Return, the firm reduced its exposure to Treasuries early in the year and missed out on a powerful rally over the summer and fall. Manager Bill Gross has offered mea culpas, but his fund still shed close to $500 million in November. A darling for much of the year, PIMCO Unconstrained Bond also lost close to $500 million to outflows. Vanguard's flat flows for the month look more anomalous. They owe mostly to the $5.1 billion in flows from Vanguard Asset Allocation, which will likely be merged into Vanguard Balanced Index at some point. This actively managed fund has been disowned by its own family, as Vanguard's four LifeStrategy funds have dropped it from their lineups. If not for Vanguard Asset Allocation, the family likely would have had the month's strongest inflows Morningstar, Inc. All rights reserved.

4 Morningstar Direct SM Release Date: Page 1 of 6 Morningstar Categories Ranked by Current TNA ($Mil) Rank Name Estimated Net Flow ($mil) Total Net Assets ($bil) Total Return 1-Mo YTD 1 Intermediate-Term Bond 8,516 17,986 24,985 14, (0.64) Large Blend (2,810) (7,829) (18,684) (19,207) (0.53) (1.69) 3 Large Growth (4,055) (9,168) (34,337) (37,851) (1.06) (1.35) 4 Large Value (1,751) (4,076) (8,639) (9,865) (0.49) (2.03) 5 Foreign Large Blend (2,569) (6,304) (4,096) 2, (2.75) (11.88) 6 Moderate Allocation (6,056) (7,000) (14,714) (16,788) (0.83) (0.52) 7 World Allocation ,264 18, (1.33) (3.47) 8 World Stock (1,885) (3,308) (13,355) (13,674) (1.75) (6.76) 9 Short-Term Bond 1,188 (41) 11,595 10, (0.34) Mid-Cap Growth (1,478) (2,978) (11,168) (10,072) (0.62) (2.18) 11 High Yield Bond (1,186) 7,713 10,947 12, (2.14) Diversified Emerging Mkts 736 2,918 19,486 23, (3.16) (16.82) 13 Mid-Cap Blend (721) (1,637) (870) (489) (0.42) (3.61) 14 World Bond (409) ,838 25, (1.85) Foreign Large Value ,101 3, (2.90) (10.82) 16 Small Blend (537) (1,315) (1,645) (517) (0.24) (4.38) 17 Intermediate Government 508 2,016 (3,780) (7,008) Conservative Allocation 1,071 (1,746) 9,790 11, (0.86) Multisector Bond ,764 8, (1.45) Muni National Interm 1,306 2,036 4 (2,693) Small Growth (563) (1,138) (2,295) (2,065) (0.39) (2.93) 22 Foreign Large Growth 17 (350) 4,715 5, (2.52) (10.06) 23 Mid-Cap Value (429) (715) (898) (793) (0.41) (4.29) 24 Inflation-Protected Bond 1,491 3,146 8,397 8, Muni Short 991 1,945 1,639 (275) Muni National Long (5,475) (7,945) Small Value (188) (231) (1,002) (371) (5.40) 28 Bank Loan (677) (486) 12,602 16, (0.54) Real Estate ,792 2, (3.44) High Yield Muni (1,676) (3,564) (0.05) Commodities Broad Basket 252 1,602 10,199 11, (0.90) (4.87) 32 Nontraditional Bond (946) (2,672) 8,891 10, (0.63) (1.91) 33 Emerging Markets Bond 793 1,641 11,923 12, (2.25) Short Government (486) (1,131) Health (171) (242) (262) (641)

5 Morningstar Direct SM Release Date: Page 2 of 6 Morningstar Categories Ranked by Current TNA ($Mil) Rank Name Estimated Net Flow ($mil) Total Net Assets ($bil) Total Return 1-Mo YTD 36 Ultrashort Bond (131) (35) 1,859 1, (0.13) Muni California Long (29) (73) (2,808) (3,788) Natural Res (60) (295) 2,346 3, (0.12) (9.62) 39 Equity Precious Metals (123) (376) (1,617) (1,086) (8.28) 40 Long-Term Bond , (1.48) Muni New York Long 39 (4) (2,180) (2,875) Foreign Small/Mid Value (60) (12) 1,389 1, (3.41) (13.35) 43 Equity Energy 25 (87) 1,094 1, (5.00) 44 Muni Single State Long (1,489) (2,199) Technology (187) (138) (2,066) (1,890) (3.08) (5.24) 46 Foreign Small/Mid Growth (233) (424) (362) (112) (2.90) (12.35) 47 Global Real Estate ,295 2, (3.99) (8.99) 48 Pacific/Asia ex-japan Stk (248) (410) (2,901) (2,583) (5.81) (17.64) 49 Long/Short Equity ,323 1, (0.80) (3.21) 50 Utilities ,008 2, Market Neutral ,059 2, (0.31) (0.04) 52 Multialternative 475 1,082 3,743 4, (0.92) (2.83) 53 Muni Single State Interm (756) (1,107) Europe Stock (254) (246) (1,115) (1,265) (3.05) (12.43) 55 Aggressive Allocation (93) (211) (815) (885) (1.13) (3.50) 56 Convertibles (106) (249) (1.79) (5.60) 57 Muni California Intermediate (226) Muni Pennsylvania (10) (23) (727) (995) Currency 96 (158) 3,559 3, (1.30) (2.88) 60 Long Government Muni New York Intermediate (402) (529) Managed Futures ,540 3, (7.20) 63 Muni New Jersey (620) (878) Muni Massachusetts (419) (658) Diversified Pacific/Asia (96) (208) (2.25) (15.10) 66 China Region (68) (228) (1,518) (1,580) (4.25) (22.43) 67 Latin America Stock (71) (177) (1,846) (1,943) (6.50) (21.29) 68 Bear Market 455 (98) 194 (277) (0.53) (10.56) 69 Muni Ohio 7 5 (591) (746) Financial (54) (38) (656) (544) (3.52) (16.31)

6 Morningstar Direct SM Release Date: Page 3 of 6 Morningstar Categories Ranked by Current TNA ($Mil) Rank Name Estimated Net Flow ($mil) Total Net Assets ($bil) Total Return 1-Mo YTD 71 Muni Minnesota 6 8 (249) (334) Communications (47) (45) (272) (336) (5.41) 73 Japan Stock ,137 1, (0.94) (12.00) 74 Target Date (0.88) (0.36) 75 Industrials (7) 16 (247) (203) (0.32) (7.62) 76 Target Date (1.05) (2.14) 77 Target Date (2) (1.09) (2.03) 78 Consumer Defensive (26) Consumer Cyclical (31) (5) (1.27) Target Date (1.14) (3.22) 81 Miscellaneous Sector (1) (34) (2.06) (9.37) 82 Retirement Income (3) (0.74) Target Date (7) (12) (0.80) Target Date (0.94) (0.47) 85 Target Date (2) (1.17) (3.30) 86 Target Date (1.21) (3.78) 87 Target Date (1.23) (3.80) 88 Commodities Precious Metals Top 10 (10,356) (22,055) (52,147) (61,631) 4, , All (6,319) (3,703) 74,181 70,197 7, , Top Fund Families Ranked by Current TNA ($Mil) Rank Name Estimated Net Flow ($mil) Assets Under Management ($bil) 1 Vanguard 73 1,682 22,711 25,244 1, , American Funds (6,875) (12,778) (72,423) (79,258) Fidelity Investments (4,183) (6,437) (27,970) (29,711) PIMCO (1,040) (1,471) 29,634 23, Franklin Templeton Investment Fds ,215 12, T. Rowe Price 900 2,041 8,282 7, Columbia (1,264) (2,065) (7,014) (7,494) JPMorgan 1,168 2,332 17,046 17, BlackRock ,527 10, OppenheimerFunds (367) (497) (1,385) (665)

7 Morningstar Direct SM Release Date: Page 4 of 6 Top Fund Families Ranked by Current TNA ($Mil) Rank Name Estimated Net Flow ($mil) Assets Under Management ($bil) 11 Dimensional Fund Advisors 869 1,905 15,100 16, John Hancock (69) (134) Dodge & Cox (680) (1,499) (4,717) (5,381) Invesco (266) (755) (4,219) (4,925) Janus (687) (1,379) (6,180) (7,137) MFS ,433 2, Hartford Mutual Funds (992) (2,115) (9,598) (9,850) Wells Fargo Advantage 590 1,599 3,879 3, American Century Investments ,866 2, Lord Abbett ,900 5, Eaton Vance (693) (1,708) (2,389) (2,193) Principal Funds ,228 2, ING Retirement Funds (440) (856) (5,271) (5,710) Legg Mason/Western (146) (4) (3,763) (5,077) Harbor ,066 1, Goldman Sachs (389) (540) (1,975) (2,419) GMO (1,136) (1,193) Federated 770 1, (33) Putnam (404) (682) (3,320) (3,623) AllianceBernstein (303) (389) (3,294) (3,699) Thornburg 62 (93) 5,797 6, First Eagle ,383 7, Dreyfus ,086 1, DWS Investments (222) (296) (1,367) (1,588) Ivy Funds (4) 114 4,481 5, Nuveen 286 (21) 1,251 (35) Prudential Investments ,224 4, USAA ,804 1, MainStay 603 1,449 8,329 8, Oakmark (135) (162) 2,606 2, TIAA-CREF Mutual Funds 3,194 3,485 6,582 7, Northern Funds ,126 2, Natixis Funds ,376 2, Russell (55) (76) Pioneer Investments (250) 66 (803) (732)

8 Morningstar Direct SM Release Date: Page 5 of 6 Top Fund Families Ranked by Current TNA ($Mil) Rank Name Estimated Net Flow ($mil) Assets Under Management ($bil) 46 Schwab Funds (101) Royce (306) (806) (800) (690) Artisan (126) (52) Delaware Investments ,952 1, Davis Funds (754) (1,426) (6,999) (7,381) Top 10 (11,468) (16,199) (10,376) (20,167) 4, , Top 50 (8,612) (13,667) 18,706 6,877 6, , Other 2,293 10,133 56,595 64,245 1, , All (6,319) (3,534) 75,300 71,122 7, , Asset Classes Name Estimated Net Flow ($mil) Assets Under Management ($bil) U.S. Stock (12,509) (28,796) (74,527) (74,817) 3, , International Stock (4,294) (7,161) 8,387 20,586 1, , Balanced (4,634) (8,456) 12,071 14, Taxable Bond 10,166 31, , ,370 2, , Municipal Bond 3,052 5,072 (15,702) (28,813) Alternative 1,647 2,160 12,801 13, Commodities 253 1,603 10,201 11, All Long Term (6,319) (3,703) 74,181 70,197 7, , Morningstar Stewardship Grades Stewardship Grade Funds Graded Estimated Net Flow ($mil) Total Net Assets ($bil) YTD 2011 YTD Mkt Sh % Mkt Sh % A 85 (7,836) (14,967) (74,948) (80,893) 1, , B 286 (1,937) (5,902) 28,019 27,589 1, , C 654 (6,608) (10,718) (27,930) (37,612) 1, , D 78 (708) (525) (525) (244) F 2 3 (8) (114) (118) Not Rated ,767 28, , ,475 2, ,

9 Morningstar Direct SM Release Date: Page 6 of 6 Investment Company Institute Methods of Sale Name Estimated Net Flow ($mil) Total Net Assets ($bil) Institutional 14,035 26, , ,215 2, , Non-Proprietary (9,526) (15,633) (63,215) (72,471) 2, , Direct Market (15,507) (26,232) (91,185) (102,392) 2, , Proprietary Non-Bank (1,092) (1,771) (11,926) (13,501) Variable Annuity (1,151) (2,224) (13,480) (14,358) Proprietary Bank ,629 9, Unclassified 6,572 15,092 34,831 36, Total (6,319) (3,703) 74,181 70,197 7, , Morningstar Ratings Name Estimated Net Flow ($mil) Total Net Assets ($bil) QQQQQ 8,754 17, , ,990 1, , QQQQ 1,235 (1,182) 67,843 75,774 2, , QQQ (11,134) (25,374) (116,817) (131,496) 2, , QQ (8,852) (16,581) (96,116) (106,680) Q (6,935) (8,353) (27,211) (30,267) Not Rated 10,613 30, , , Total (6,319) (3,703) 74,181 70,197 7, ,