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Fund Spy

Investors Blackball U.S. Stock Funds

Domestic-stock funds had multibillions in outflows, but all other asset classes experienced growth in February; also PIMCO funds' growth, Fidelity's target-date funds, and strong 2010 starts for fund families.

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January's inflows into U.S. stock funds proved to be a brief respite, as flows turned negative once again in February. Last month, investors withdrew $3.7 billion from U.S. equity funds, for the fifth outflow in the last six months. During the last 12 months, $21.3 billion has exited the asset class.

Every other major asset class took in assets in February, with taxable bond funds once again leading the way. Taxable bond funds have dominated inflows since January 2009. Although flows into this asset class peaked in the fall of 2009, the trend remains strong and is showing no signs of abating.

Muni-bond funds have also experienced steady and strong inflows during the past several months. Inflows during the first two months of the year already surpass $10 billion, for the strongest start the asset class has ever experienced. Investors continue to prefer the short end of the curve, with the muni-national short category accounting for around half of all muni-fund inflows. Money market funds, meanwhile, saw outflows of $71.1 billion in February, and $663.5 billion during the past 12 months. It's certainly possible that some of the money exiting low-yielding money markets has gone into short-term muni funds, as investors move farther out on the yield curve in search of more income.

Sonya Morris does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.