Equity mutual funds witnessed robust net inflows of $22.49 billion in November 2013, against outflows of $23.17 billion experienced in November 2012.
Tobias Levkovich and team at Citi Research point out for the first 51 weeks of 2013, total equity funds attracted inflows of $140.83 billion through December 18th, in sharp contrast to outflows of $147.15 billion over the same period in 2012.
Strong inflows in domestic and international equity mutual funds
Citi analysts point out that domestic equity funds registered inflows of $6.56 billion, though it edged down from the $8.01 billion inflow witnessed in the previous month. However, for the first eleven months of 2013, U.S. oriented funds experienced cumulative inflows of $27.15 billion, showing a marked recovery from outflows of $129.69 billion recorded in the first eleven months of 2012. Moreover, this compares favorably with exits of $155.97 billion and $132.46 billion recorded in 2012 and 2011 respectively.
At this year's SALT New York conference, Jean Hynes, the CEO of Wellington Management, took to the stage to discuss the role of active management in today's investment environment. Hynes succeeded Brendan Swords as the CEO of Wellington at the end of June after nearly 30 years at the firm. Wellington is one of the Read More
The following table provides a snapshot of funds flows across various traditional mutual funds:
As is evident from the above table, funds that invest primarily internationally attracted $15.94 billion in November, and were up from inflows of $12.67 billion experienced in October.
Bonds funds witnessed outflows
Citi analysts point out total bond funds witnessed a sixth consecutive month of outflows, as investors pulled $18.12 billion in November compared with October’s $15.62 billion outflow.
As can be seen from the following graph, total bond assets continued to retreat from their April 2013 peak as assets in November 2013 fell to $3.3 trillion.
The analysts note YTD through November, bond funds suffered outflows of $57.92 billion, which is a substantial drop from the $296.35 billion inflow attracted during the first 11 months of 2012.
November witnessed outflows in growth funds
Citi analysts note growth funds posted outflows of $3.84 billion in November, moderating slightly from the $3.90 billion inflow posted in October. The analysts point out that YTD through November, growth funds suffered outflows of $12.50 billion, but improved from the $98.79 billion outflows experienced during the first 11 months of 2012.
In comparison, value funds experienced respectable inflows of $10.40 billion in November and easily surpassed November 2012’s outflow of $1.82 billion.
The following graphs highlight the total assets and monthly growth fund flows:
Citi analysts believe that a 1Q14 correction in the 5% to 10% range is possible given weakening EPS forward guidance trends and some softening in the Cyclical Expectations Model. However, with a 1,975 S&P 500 target by year-end 2014 backed by improved economic conditions, Citi analysts remain generally constructive longer term while continuing to advise nearer term tactical caution.