Amid a rising equity market, U.S. investors mostly have headed for the exits in 2012
Domestic stock mutual funds are poised to suffer their most outflows ever this year — despite a stellar performance by the stock market.
Investors pulled a net $99.6 billion out of U.S. stock mutual funds through November, already surpassing the record $97 billion of outflows in 2008, according to Morningstar Inc. Domestic stock funds had $89 billion of outflows in 2011.
The outflows have been in stark contrast to the market's performance this year. Through mid-December, the S&P 500 had a return of 15%.
Actively managed stock funds are actually doing a little better this year than in 2008, with $119 billion in outflows through November, versus $132 billion in outflows in 2008. Flows into passive U.S. stock funds (including exchange-traded funds), however, attracted only about $50 billion through the end of November, half of what they received in 2008, making the net outflows loom larger.
For those not heading for the exits, fund costs remain crucial. That's true of actively managed funds as well as the increasingly popular passive fund offerings. Indeed, active stock funds that rank in the bottom quintile of expense ratios have shed only 4% of their assets this year, Morningstar noted. In comparison, the most expensive funds lost 12% of their assets.
On the other end of the spectrum, the appetite for bonds continued unabated. Taxable-bond funds had $17 billion in inflows, with the $285 billion Pimco Total Return Fund Ticker:(PTTAX) leading all funds, with $2.5 billion in inflows. Pacific Investment Management Co. LLC, the fund's parent, topped all firms, with $6.7 billion in inflows.