Global bond market funds were the biggest winner in 2011, as investors seeking safety poured more than $110 billion into fixed-income funds, according to data from fund tracker EPFR Global released on Friday.
U.S. bond funds had the single largest amount of inflows as tracked by EPFR, at $62.3 billion, a good thing for investors who responded to the year's volatility by staying away from stocks and commodities.
The U.S. benchmark 10-year Treasury returned about 17 percent for the year, outperforming most other debt markets, including German bunds, corporates, and high-yield bonds.
Most classes of bond funds saw inflows, save for European bond funds, as investors fled from the increased sovereign risk in those markets. European bond funds posted outflows of $29.8 billion in 2011.
The U.S. stock market went nowhere fast in 2011, but for fund investors that was enough late in the year; investors put money in U.S. equity funds for the eighth week of the last 10. EPFR showed equity funds overall took in $412 million for the week ended December 28.
"Institutional investors actually committed over $50 billion to the U.S. funds we track," said Brad Durham, managing director of Cambridge, Massachusetts-based EPFR Global. "While retail investors were in full retreat from U.S. equities in 2011, institutional investors were a pillar of support that helped the S&P 500 index get back to the general vicinity of its starting point for the year."
For the year, however, investors mostly pulled money from stocks. Developed markets saw an outflow of $123.84 billion, and emerging markets funds outflows were $47.7 billion.
A number of sectors and regions saw record outflows, according to EPFR, including the United States, India, Brazil and Europe, along with financial and energy sector-focused funds.
MONEY FUNDS LOSE AGAIN
Money market funds posted greater outflows in 2011 than any other class, according to EPFR. Outflows of $108.4 billion in 2011 followed an exodus of nearly $500 billion in the previous year.
Another decliner in terms of funds - and one of the few bond fund classes to say so - was the municipal market. These funds lost $19.5 billion in 2011, spurred by a December 2010 warning by analyst Meredith Whitney that there would be billions of dollars in municipal defaults .
Her call has been roundly pilloried in the muni market, and after 22 straight weeks of outflows, investors have piled back into that market. In the fourth quarter, inflows totaled $2.4 billion.
Emerging market stocks funds lost favor with investors. Redemptions from Latin American equity funds rose to $10.8 billion, easily surpassing the record of $4 billion-plus in 2008. Brazil funds had a record outflow of $2.3 billion.
China-oriented funds posted outflows of $3.7 billion, and funds from Russia, Africa and the Middle East also posted outflows.
Gold-oriented funds were again a source of new money, with more than $8.1 billion in inflows. But with a slump in the price of spot gold in recent weeks, gold and precious metals funds have seen outflows of $1.6 billion in the fourth quarter, and there are suggestions of more declines ahead. The overall inflow for gold and precious metals funds for the year is just a bit more than half of 2010's $15.95 billion in new funds in the sector.
Other areas associated with safety did well. Utilities and real estate funds had a strong year, and Germany-focused funds saw an inflow of $18.8 billion, compared with a $15.9-billion outflow for all Western Europe funds.
(Reporting By David Gaffen; Editing by Leslie Adler)