Morningstar: Mutual funds recoup 90% of assets lost from market collapse

Investment managers are close to making up the ground they lost in the second half of 2008 when investors pulled $251 billion out of mutual funds, according to data released today by Morningstar Inc. More than $226 billion has been poured into mutual funds in the first eight months of 2009. In August alone, investors placed more than $54 billion into funds — the largest monthly inflow since February 2007. But while that's a positive sign for fund firms, it doesn't necessarily signal renewed enthusiasm for equities. The vast majority of inflows have been to fixed-income funds, according to Morningstar. Approximately 60% of August’s flows went to taxable-bond funds, and municipal-bond funds made up another 20%. That’s been a boon to Pacific Investment Management Co., for one: the bond giant’s $177.5 billion Pimco Total Return Fund has been the top-selling fund throughout 2009. And August proved to be the fund’s best month yet, with almost $5.5 billion in inflows. At its current size, the Pimco Total Return Fund is almost twice as large as the next-most-popular fund, the $105.4 billion Vanguard Total Stock Market Index Fund from The Vanguard Group Inc. The popularity of Pimco Total Return has boosted the firm’s overall share of the mutual fund market to 4.5% at the end of August, from 2.5% at the beginning of 2007, according to Morningstar. Despite such inroads, the mutual fund world continues to be dominated by Vanguard, which had $961 billion in long-term mutual fund assets at the end of August, followed by Capital Research and Management Co., adviser to the American Funds group, with $848 billion and Fidelity Investments with $676 billion. The American Funds group, however, continued to lose ground, according to Morningstar. Investors pulled $2.6 billion out of the group in August, bringing its year-to-date outflows to $17.4 billion. Investors sent $3.4 billion to Fidelity in August, bringing its year-to-date net inflows to $15 billion. Vanguard took in more than $9 billion for the month, taking its year-to-date inflows to almost $66 billion.