Equity mutual funds were up $23.97 billion in January, up from just $167 million worth of inflows in December, but still well below the $37.63 billion inflows in January 2013. International equity funds lead with $16.92 billion net inflows, beating December’s $12 billion in net inflows. Domestic equity funds which had $7.05 billion net inflows in January, partially recovering from $11.84 billion worth of net outflows in December.

Equity funds were up $41.36 billion for the first eight weeks of 2014 (through February 19) split $16.19 billion to domestic equity funds and $25.17 billion to foreign equity funds, compared to $43.56 worth of total inflows for the same period in 2013.

total equity flows 0314 Bond funds

Bonds may end streak of outflows

Bond funds had their eighth straight month of outflows in January, losing $1.23 billion, though high yield bond funds reported $824 million worth of inflows after gaining $346 million in December. Stock ETFs had negative issuances of $14.85 billion, losing most of the ground from $14.92 billion in positive net issuances in December, while emerging market funds had $1.23 billion net inflows last month, up from $1.06 billion in December.

Total bond flows were up $1.18 billion through February 19, possibly breaking the eight month streak of outflows if the end of February is as strong, but this is still down compared to $48.73 worth of inflows during the same period last year.

total bond fund flows 0314

Growth mutual funds had $3.87 billion worth of inflows in January, regaining some of the $7.15 billion in outflows from December. Value funds gained $3.17 billion in December after losing $4.68 billion in December, and aggressive growth funds had $811 million in outflows last month following $957 in outflows in December. Money market funds, including retail and institutional investors, had $9.82 billion worth of outflows in January after gaining $44.14 billion in December.

EM flows Bond fund money market flows 0314 Bond fund

10% correction still possible for 1H14

While credit conditions remain favorable in the US, disappointment in emerging economies and a lackluster though improving Europe could hold back the earnings story. Admittedly, better hiring intentions are encouraging. Plus stock buyback activity has stepped up and money has begun to flow into equity funds,” write Citi analysts Tobias Levkovich, Lorraine Schmitt, and Christina Wood.

The Citi analysts have been warning investors for some time that a 5% – 10% correction is possible during the first half of the year because of falling EPS guidance and euphoric sentiment, but continue to maintain a 2014 year-end S&P 500 target of 1,975.