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The 10 Hottest-Selling Funds in the First Half

Do these funds deserve all that money?

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I'm going to discuss an increasingly rare breed: funds that are getting net inflows. With the markets getting pummeled, not many funds are drawing investor interest. Because you may well be considering one of these funds as something of a safe haven in rocky times, I'll run through the 10 funds with the greatest inflows in dollar terms for the first half of 2008. To be clear from the outset, none of these funds are true safe havens. Most have lost less than their peers in this market--and I'd expect that most would do so in most down markets--but these are all long-term funds that will likely lose money when their respective markets go in the tank.

1.  PIMCO Total Return Institutional (PTTRX)
Net inflows of $14 billion or 13% of assets.
Bill Gross and his team made a brilliant call that the housing bubble would burst and interest rates would fall as the effects knocked down numerous dominos in the economy. For the biggest bond fund in the world to be well positioned and help protect its legion of investors is heartening. Gross still makes mistakes but this a fine long-term holding. Individual investors are better off with  Managers Fremont Bond (MBDFX) or  Harbor Bond (HABDX) which are virtual clones of the PIMCO fund and charge the little guy less.

2.  Vanguard Total Stock Market Index (VTSMX)
Net inflows of $9 billion or 9%.

This fund is getting its inflows mainly via Vanguard's target-date funds. Obviously an index fund that tracks the market will go down exactly the same amount as the market, so it's no safe haven--though I would add that index funds rarely end up in the bottom quartile during a bear market. I like seeing a boring low-cost index fund on a bestseller list like this. Be patient with a fund like this and you'll be rewarded.

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Russel Kinnel has a position in the following securities mentioned above: PTTRX. Find out about Morningstar’s editorial policies.