34 months and counting: American Funds' outflow woes roll on

34 months and counting: American Funds' outflow woes roll on
It's now almost three years since the fund giant has recorded net inflows
JUL 02, 2012
The last time American Funds mutual fund family took in more money than investors withdrew in a single month, the S&P 500 was in the 800s. That was in April 2009. Since then, the S&P 500 has risen to more than 1,370. Meanwhile, American Funds has suffered through 34 straight months of net outflows. In fact, American Funds was the only mutual fund firm among the 10 largest that failed to record positive inflows in February, according to Morningstar Inc. American suffered $5.9 billion in outflows, lead by The Growth Fund of America (AMREX) which lost $3 billion, according to Morningstar. The struggles of American Funds have been closely correlated with the growth of passive investing. American peaked with $1.15 trillion in assets in 2007 and has lost about 18% of its total assets since then. Meanwhile, passive index funds have been growing, hitting $787 billion as of the end of February. Their market share has grown to 22%, up from 20% in February 2010. "We're not doing anything fundamentally different than in the past," said Chuck Freadhoff, a spokesman for American Funds. "We continue to believe that intensive global research leads to good results over time." But the shift toward passive index options has benefited a number of rivals, most notably The Vanguard Group Inc.. In Februrary, the firm that created index funds back led all mutual fund firms with $1.4 billion of inflows for the month. Over the past 12 months, Vanguard has more than doubled its closet competitor in mutual fund inflows. Unfortunately for the rest of the mutual fund industry, Vanguard may just be getting started. Its sales dominance has come largely without a focus on the financial adviser, but this year, it will be doubling its sales force to better penetrate the market. RELATED ITEM Vanguard makes wholesale bid to woo advisers » February wasn't all doom and gloom for active management, however. Investors still flocked to star manager Jeffrey Gundlach and his $20 billion DoubleLine Total Return Fund Ticker:(DBLTX). That offering led all individual funds with almost $2.4 billion of inflows for the month. The popularity of the fund, and its manager, helped make DoubleLine Capital LP the fourth-biggest net sales winner, despite not even cracking the top 50 firms in total assets.

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