Money flows to global equity and other stock funds accelerated during the fourth quarter, signaling a possible twist in 2011 from the record investments made in bond portfolios over the last year, according to a report published by EPFR Global on Friday.
Funds focused on the United States, Japan and other developed market stocks collected $28.44 billion from investors for the fourth quarter, marking a significant shift from full-year data that showed outflows of $62.36 billion, the report said.
Overall, EPFR Global-tracked equity funds took in $30 billion in 2010 for their best year since 2006, led by a record $92 billion earmarked for emerging market stock portfolios, it said.
Emerging markets will stay strong but you will see a lot more interest in domestic stocks in 2011, said Keith Springer, president of Springer Financial Advisors in Sacramento, California. The United States will likely lead developed nations in terms of return, he predicted.
Individual investors are starting to be a little nervous about missing the upside in stocks after dedicating much of their portfolios to bonds over the past few years, he said.
The year is also ending with record flows into global and emerging market bond funds as well as commodity and real estate funds, the report said.
Global bonds saw inflows of $372.46 billion this year -- including $29.81 billion in the fourth quarter -- compared with $302.65 billion in 2009, EPFR said. But they posted outflows in the past six of seven weeks for their poorest showing since the financial crisis deepened in late 2008, it said.
The fund groups that set records were, however, not necessarily the ones that will carry momentum into the new year, EPFR Global said in a statement.
U.S. bond funds saw $7.3 billion fall away in the last quarter amid concerns over the fiscal health of towns, cities and public works, EPFR said. U.S. bond funds drew $178.40 billion this year, down from $214.09 billion the year before.
Specific sectors showing greater investor interest include equity funds focused on Japan and Europe the Middle East and Africa, EPFR said. Financial, technology and balanced funds also saw flows accelerate in the fourth quarter, it added.
For the second straight year, commodities funds led inflows among sectors, with $29.33 billion, EPFR said. In 2009, the sector took in $19.95 billion.
Commodities ended the year with another week of inflows as copper prices climbed to new highs, EPFR said.
(Editing by Gary Crosse and Leslie Adler)