U.S. Mutual Fund Investors Shy Away From Domestic Equity Funds

by: Lipper Insight at Thomson Reuters

By Patrick Keon

Since the global financial crisis of 2008, U.S. domestic equity funds have suffered net outflows in each year except one (2013). Conversely, U.S. nondomestic equity funds have experienced net inflows in every year except two (2008 and 2012). Per Lipper's methodology, the difference between U.S. domestic and nondomestic equity funds is that, while both types of funds are domiciled in the U.S., domestic equity funds have greater than 75% of their assets invested in U.S. stocks and nondomestic equity funds have less than 75% invested in that asset type. Despite the trend evident since the financial crisis, domestic equity funds-with $5.7 trillion in assets under management-remain significantly larger than nondomestic equity funds-with $2.0 trillion in assets.

Domestic equity funds had negative net flows of over $100 billion each for 2008 and 2012, and they are on pace to approach that number again this year; they have seen approximately $30 billion leave their coffers for the year to date. The largest contributors to this year's outflows have been funds in Lipper's Large-Cap Core Funds (-$18.0 billion) and Large-Cap Growth Funds (-$14.0 billion) classifications. Within the Large-Cap Core classification the Virtus Equity Trend Fund (MUTF:VAPAX) (-$3.0 billion), the Davis New York Venture Fund (MUTF:NYVTX) (-$2.3 billion), and the AMG Yacktman Focused Fund (YAFFX) (-$2.0 billion) have had the largest net outflows. The funds in the Large-Cap Growth group that have seen the most significant amounts of money leave are the Fidelity Contrafund (MUTF:FCNTX) (-$3.1 billion), the American Funds Growth Fund of America (MUTF:AGTHX) (-$3.0 billion), and the MainStay Large Cap Growth Fund (MUTF:MLINX) (-$1.8 billion).