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Mutual Fund Inflows Continue Apace in 2010

The market began 2010 on a sour note, but that didn't keep U.S. investors away from mutual funds.

Sonya Morris, 02/17/2010

The stock market began 2010 on a sour note, with all major indexes off more than 3% for the month of January. But that didn't keep U.S. investors away from mutual funds, which saw total net inflows of $44.5 billion.

U.S. stock funds reversed a four-month slide, taking in roughly $2.7 billion in assets. International-equity funds gathered more than $8.1 billion in assets, the biggest monthly inflow since December 2007.

And bond funds continued to dominate all other asset classes, as investors added $28.0 billion to fixed-income funds in January. Based on total net assets, fixed-income funds represent 30% of the mutual fund market, up from 19% at the end of 2007.


Fidelity Net Inflows Despite Big Outflows in Some Funds
Although U.S. equity funds returned to net inflows in January, large-growth funds continue to bleed assets. The category gave up $876 million in assets for its seventh-straight monthly outflow. Five Fidelity funds topped the list of funds losing assets: Magellan FMAGX ($311 million), Growth Company FDGRX ($143 million), Independence FDFFX ($143 million), Advisor Capital Development FDTTX ($139 million), and Capital Appreciation FDCAX ($109 million). Fidelity also had the least-popular large-value and large-blend funds in January; Fidelity Equity-Income FEQIX shed $797 million while Fidelity Spartan U.S. Equity Index FUSEX experienced outflows of $640 million.

Despite these notable outflows, the majority of the funds in Fidelity's lineup gathered assets for the month, and the firm managed to register net inflows in January of almost $1.6 billion. Fidelity's target-date series funds took in $787 million in assets, helping to lift the firm into positive territory. Fidelity Strategic Advisers Value FVSAX, which is only available to investors enrolled in Fidelity's portfolio advisory services, also had strong inflows of $667 million. However, that's a subadvised fund, so those assets don't stay in house.

Although the firm experienced almost $16.2 billion in inflows in 2009 and another $1.6 billion in January, Fidelity hasn't come close to making up 2008's outflow of $37.3 billion. The fund family's share of the open-end fund market (based on total net assets) has gradually eroded from 13% in 1999 to just less than 11% today. If you include exchange-traded funds in the mix, Fidelity's current market share stands at 9.5%.

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