INsider: Fixation with fixed-income funds since 666 has burned investors

INsider: Fixation with fixed-income funds since 666 has burned investors
Three years after equities hit rock bottom, large-cap stocks have far outstripped debt funds
MAR 08, 2012
It's no secret that fixed-income mutual funds have been investors' favorite funds in the wake of the financial crash. But on the three-year anniversary of the bear market's bottom, it looks like the fixation on fixed income may have caused some to miss out on the market's rebound. Of course, hindsight is 20/20, but judging by how investors deployed their cash over the past three years, it seems the focus may have been a little too bond-heavy. All 10 of the top selling retail mutual funds since March 6, 2009 — the day the S&P 500 hit its low of 666 — have been fixed-income funds, according to Morningstar Inc. The Pimco Total Return Fund Ticker:(PTTAX) led the way with inflows of $61 billion. The Vanguard Total Bond Market Index Funds I and II took in a combined $53 billion, and the Templeton Global Bond Fund Ticker:(TPINX) came in third with $42 billion in inflows. None of those funds came anywhere near matching the returns on the S&P 500. Over the past three years, the S&P 500 has returned 108%. Pimco Total Return has gained 32%, the Vanguard Total Bond Market Index Funds have returned 23%, and the Templeton Global Bond Fund has gained 49%. Investors did get one call right, though. The best-selling equity mutual fund since the bottom is the Oppenheimer Developing Markets Fund (ODMAX); it's beaten the S&P 500 handily with a return of 148%.

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