2011 Mutual Fund Flows: Hey, I Think We Have a Trend!

Cynics who saw inflows into U.S. equity mutual funds in January dismissed it as a fluke, convinced that...just like last year...February would once again see outflows.

Wrong. Both trimtabs.com and ICI have reported consisted inflows in February into U.S. equity funds. In addition, ICI noted only modest inflows into international equity funds, and continuing OUTFLOWS from bond funds.

That may be one reason rates are going up: as individuals have stopped buying Treasurys and other bonds, rates have ticked up.

Why the sudden interest in U.S. stocks? Uh, have you seen the S&P 500, up 6 percent year to date? The fund returns reflect that:

2011 fund returns (YTD)

U.S. equity funds: up 4.9%

International equities: up 1.6%

Bonds: down 0.5%

Source: trimtabs.com

One other factor potentially helping stocks: Charles Biderman at trimtabs.com tells me large cap U.S. companies have been announcing aggressive buybacks—$50 billion in February so far, well above the monthly average last year of $30 billion. More money coming chasing fewer shares.

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