Von Aldo

American Funds Suffer Outflows and Bond Funds Rule!

Morningstar released its estimated mutual fund and ETF asset flows for January. I know there are plenty of investors out there who use asset flows to determine investment strategies (the so-called liquidity theory). But I am no expert --- indeed, my contrarian impulses might take me to areas that have been experiencing asset outflows for a while. (For more on the liquidty theory, go to TrimTabs .)

Here are some fun facts to know and tell from Morningstar's report:

DFA is the only frim that had net inflows in every calendar year in this decade, even in 2008 when almost every other firm experienced outflows." That's part of a larger trend: the rise of passive investing, the funds of which now have $1.5 trillion (excluding leverage and sector funds). Passive strategies increased their market share to 20 percent, up from 11 percent at the beginning of 2000.

American Funds, the darling fund family of financial advisors everywhere, suffered its seventh-straight month of outflows in January. But, Morningstar notes, "the level of outflows ($962 million) was much lower thann 2009's pace."

Bond funds rule! "Based on total net assets, fixed-income funds represent 30 percent of the mutual fund market, up from 19 percent at the end of January 2007," Morningstar says.

Time to sell bond funds? Probably.

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