Chart of the Day – Stellar Look at Long-Term Mutual Fund Trends

by Enis October 22, 2012 2:07 pm • Commentary

Barry Ritholtz at The Big Picture Blog had a great macro chart this weekend.  It’s from a HSBC report about mutual fund flows, and it shows Cumulative net flows into U.S. equity mutual funds, by type:



The chart shows the gradual shift in the preferences of U.S. investors.  Throughout the bull market of the 1990’s, investors primarily loaded up on Growth, Balanced, and Aggregate Growth funds.  So an obvious focus on growth.  Investors showed must less enthusiasm for U.S. growth during the 2003-2007 bull run, instead preferring International, Global, and Income funds.

A few broad trends I find interesting in this chart:

  1. Despite all the hoopla about income and dividend funds, income fund inflows actually peaked in 2007
  2. Interest in U.S. growth has continued to decline in the 2009-2012 bull market, despite the fact that U.S. stock performance has been much stronger than international stocks during this recent run (see my Macro Wrap from this morning for a comparison)
  3. For all the talk of the “death” of mutual funds, the cumulative balance of all fund types, based on this chart, was around $1.5 trillion in 2000, and is around $1.7 trillion today.  Not quite “death”

I bring this chart up today because I want to illustrate that mutual funds are still a sizable part of the U.S. stock market, even though ETFs have taken away some fund flows.  I continue to think the mutual fund rebalancing trade, out of winners, and into losers, persists for another couple of weeks.