Even with stock prices on the rise in 2012, investors have been consistently fleeing equity mutual funds. As of October 26, the S&P 500 had gained more than 14 percent in 2012. Nonetheless, through October 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, 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 October 26, it was up more than 8 percent this year. However, investors who have been looking for refuge from stocks in the bond market have missed out on some opportunities. That 8-percent return was six percentage points behind the S&P 500.
In second place is PIMCO Total Return, the world's largest mutual fund. Through September 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, Vanguard Total Stock Market, and JPMorgan Large-Cap Growth.
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 October 26, its return of 9.25 percent landed it in the bottom 14 percent 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 lightening 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 percent 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 percent 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 percent 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.
Inflows: $7.1 billion
Assets under management: $15.1 billion
This multisector bond fund has had a stellar 2012. Through October 26, it was up more than 18 percent this year. It has also been a steady performer, with its trailing three- and five-year returns landing it in the top 2 percent of Morningstar's multisector bond category. The fund's portfolio consists mostly of government, corporate, and securitized bonds. Relative to its peers, it has somewhat hefty exposure to mortgage-backed securities.
Vanguard Total Stock Market Index
Inflows: $7.1 billion
Assets under management: $179.1 billion
This fund seeks to replicate the MSCI US Broad Market Index. Like the rest of Vanguard's index lineup, it tracks its index at an affordable rate, as evidenced by its 0.17 percent expense ratio. With nearly 3,300 stocks in its portfolio, the fund also offers quite a bit of diversification.
Vanguard Total Bond Market Index
Inflows: $6.5 billion
Assets under management: $97.2 billion
This passively managed fund seeks to replicate the returns of the Barclays Capital U.S. Aggregate Float Adjusted Index. As such, it owns mostly high-quality bonds. As of the end of June, its average credit quality was AA. Vanguard is well known for its low-cost index funds, and this offering, which boasts an expense ratio of 0.22 percent, is no exception.
Invesco Balanced-Risk Allocation
Inflows: $5.7 billion
Assets under management: $9.5 billion
This fund has been growing quickly since its June 2009 launch. However, investors should understand what they're getting into. The fund follows a somewhat atypical strategy and tends to have hefty exposure to commodities and leveraged bonds. In addition, the fund has quite a bit of exposure to Austria, Canada, Japan, and the United Kingdom.
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JPMorgan Large Cap Growth
Inflows: $5 billion
Assets under management: $8.6 billion
This fund has outpaced all other active stock funds in term of inflows in 2012, but its performance has been relatively lackluster this year. The one bright spot for the fund has been its exposure to Apple, which has juiced the fund's returns and kept it competitive. As of the end of August, Apple accounted for more than 10 percent of the fund's portfolio. Morningstar describes the fund's hefty Apple exposure as "perhaps an inevitable outcome of manager Giri Devulapally's market-conscious approach."
JPMorgan Core Bond
Inflows: $4.5 billion
Assets under management: $28.6 billion
Manager Douglas Swanson has been with this fund since 1991. Relative to its peers, the fund has significant exposure to agency pass-through securities and low exposure to corporate bonds. The fund rarely stands out in any given year, but it has been a steady performer. This has accounted for some of the fund's popularity and resulting inflows.