February could set new mutual fund record

The U.S. mutual fund industry is set to surpass $15 trillion in assets in February.

According to Strategic Insight, a mutual fund industry research and business intelligence provider, this milestone will be achieved by continued stock market appreciation and renewed investor demand for stock and bond funds.

The industry reached $10 trillion in assets under management in 2006.

January also marked a new record for the fund industry with a net intake for stock and bond mutual funds of $90 billion.  January flows were more than triple the average 2012 monthly experience, in which the average month netted under $30 billion of inflows. An additional $30 billion was added to exchange-traded funds in January.

"Assuming modest economic expansion this year, it is plausible that annual stock and bond fund flows exceed $500 billion, more than 50 percent above the previous annual record," said Avi Nachmany, Strategic Insight’s director of research.

For the first time in a few years, monthly net intake was weighted more toward stock and balanced funds than toward bond funds. This trend is likely to persist throughout 2013, barring a major market disruption. Among the $48 billion flowing into equity and balanced funds, more than half went to U.S. equity funds with the balance going into international stock funds.

January set the all-time record for monthly flows into actively-managed stock and bond funds in the amount of $72 billion (or 80 percent of total mutual fund flows). The previous record for monthly net flows into actively-managed funds was set in January 2007 with $46 billion.

"Remarkably, January witnessed rapidly expanding demand for a very wide range of investment strategies: U.S. stock and balanced funds; emerging and developed international market stock funds; value and growth strategies; and fixed income, with the exception of U.S. Government bond funds," said Nachmany. "The two parallel rotations taking place in the fund industry will continue in 2013 and beyond -- the rotation towards stock investing and the rotation from cash accounts to bond and income strategies."

ETFs: Exchange-traded products (including ETNs) attracted $30 billion of net intake in January. Flows into stock-oriented products accounted for 97 percent ETP inflows. International equity ETFs netted $15 billion of inflows during the month, while domestic equity netted $14 billion.

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