11/6/2012 9:30 PM ET|
Funds that lured investors in 2012
The biggest and most-trusted bond funds dominate a list of mutual funds that soaked up a large portion of this year's inflows.
Even with stock prices on the rise in 2012, investors have been consistently fleeing equity mutual funds. As of Oct. 26, the Standard & Poor's 500 Index ($INX) had gained more than 14% in 2012. Nonetheless, through Oct. 24, investors had yanked more than $101 billion out of stock mutual funds this year, according to the Investment Company Institute. During the same period, they added more than $272 billion to bond funds.
So which individual funds have benefitted the most from this year's quirky flows? Here, U.S. News takes a look at the 10 funds with the most inflows in 2012. U.S. News started with the entire universe of open-end mutual funds and, with help from Morningstar, zeroed in on 2012's most popular offerings. Funds with minimum investments of more than $1 million, funds that are not available for direct purchase and funds that have been around for less than a year have been screened out.
As expected, a handful of the industry's biggest, most-trusted bond funds soaked up a large portion of this year's inflows.
Leading the pack is DoubleLine Total Return Bond (DBLTX), which has brought in nearly $16 billion this year through the end of September. The fund, which launched in 2010, is relatively new. But it is managed by bond veteran Jeffrey Gundlach, who co-founded DoubleLine in the aftermath of his uncomfortable breakup with the TCW fund family. So far, the fund has been having a solid year. Through Oct. 26, it was up more than 8% this year. However, investors who have been looking for refuge from stocks in the bond market have missed out on some opportunities. That 8% return was 6 percentage points behind the S&P 500.
In second place is Pimco Total Return (PTTAX), the world's largest mutual fund. Through Sept. 30, it had brought in more than $12 billion in 2012. That, however, is just a drop in the bucket for the fund. Indeed, the fund, managed by the legendary Bill Gross, has more than $277 billion in assets under management.
Although bond funds have gotten almost all of the attention from investors this year, a small number of stock funds have bucked the trend. On the list of the 10 funds with the most inflows this year, there are three stock funds: Vanguard Total International Stock Index (VGTSX), Vanguard Total Stock Market Index (VITSX) and JPMorgan Large Cap Growth (OLGAX)..
Of those, the only actively managed stock fund is JPMorgan Large Cap Growth. Although this fund has outpaced all other active stock funds in term of inflows in 2012, its performance has been relatively tepid this year. Through Oct. 26, its return of 9.25% landed it in the bottom 14% of Morningstar's large-growth category.
Here's the full list of the 10 funds that received the most inflows in 2012:
DoubleLine Total Return Bond
Inflows: $16 billion
Assets under management: $33.1 billion
Since this fund opened its doors in 2010, it has been raking in inflows at lightning pace. Manager Jeffrey Gundlach, who is well-respected in the industry for his bond-picking prowess, has not disappointed. Indeed, the fund's performance in 2011, when it finished in the top 2% of Morningstar's intermediate-term bond category, only served to fuel investor interest.
Pimco Total Return
Inflows: $12.1 billion
Assets under management: $277.7 billion
Iconic manager Bill Gross has run this fund since its 1987 inception. Since then, it has become the world's largest mutual fund. While not many managers could handle a fund this big, Gross has done some with impressive prowess. Indeed, the fund has accumulated an average return of more than 7% per year over the past 15 years. As Morningstar notes, the fund has several defining characteristics, including its flexible use of derivatives. Says Morningstar: "The fund's use of derivatives can be measured in different ways depending on the type you include, but Gross and PIMCO typically use as many or more -- in both variety and volume -- than just about any of their competitors."
Vanguard Total International Stock Index
Inflows: $10 billion
Assets under management: $73.3 billion
With more than 6,000 stock holdings, this fund packs quite a lot of diversification into one single offering. The fund seeks to replicate the MSCI All Country World ex USA Investable Market Index. As such, it offers exposure to countries throughout the globe. Overall, the fund's largest exposure is to Asian and European countries, which together account for more than 85% of its stock holdings. While most of the fund's holdings are in developed countries, investors also get exposure to emerging markets.
Lord Abbett Short Duration Income
Inflows: $7.7 billion
Assets under management: $25.3 billion
This fund is not afraid to play around with low-quality bonds. As of the end of June, roughly half of its portfolio was invested in bonds with a credit quality of BBB or below. Relative to its Morningstar peers, it also has hefty exposure to commercial mortgage-backed securities. On the other end of the spectrum, the fund had, as of the end of June, only negligible exposure to government bonds. The fund is growing at lightning speed. For instance, in November 2007, it had just $116 million under management, according to Morningstar.
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