Investors Still Favor Bond Funds
Ben Baden

Bonds see continued inflows while some commodities funds brace for more possible regulation

Investors still trust the safety of bond funds. June was another good month for fixed income. The Investment Company Institute reported that overall, mutual funds saw net inflows, mostly into bond funds. Bond funds experienced inflows of more than $20 billion -- up about $6 billion from May. Meanwhile, stock funds saw more outflows. The WSJ reports that investors haven't consistently put money into stock funds since the market hit its low in March 2009. Low-yielding money market funds also continued to see outflows, which brings their total outflows for the year to more than $500 billion.

[See When Choosing a Bond Fund, Keep These Factors in Mind]

If you own a commodities fund that invests in futures contracts, you may want to take note of an article published by Investment News. Commodities funds are already regulated by the Securities and Exchange Commission, but there's now a push by the National Futures Association to require them to register with the Commodity Futures Trading Commission. The article details how costly further regulation could be for mutual funds and how the SEC and CFTC have different rules that sometimes conflict with each other.

Marketwatch highlights precious metals funds' latest struggles. As concerns about global uncertainty have tapered off, so have investments in precious metals funds, which generally see huge inflows when investors get nervous about the overall market. Precious metals mutual funds lost almost 9 percent in July, according to Marketwatch.

Investment News:Commodities funds brace for regulatory 'confusion'

Marketwatch:Gold Bugs Get Swatted

[See What Gold Can (and Can't) Do for You.]

Finally, a feel-good story.

You've probably never heard of the Valley Forge fund, a large-value fund with about $15 million in assets under management. It's run by 89-year-old Bernard Klawans, who has never had any formal training in finance or money management. He says he's simply a retired aerospace engineer who enjoys managing money. The fund has beaten most of the competition over the past 10 years and is now U.S. News's top-ranked large-value fund.

[See How A One-Man Fund Beat All the Rest]

Now, some news concerning one of the powerhouses of the fund industry. Bloomberg recently reported that bond giant PIMCO sees about $1 billion in inflows each week. Also, in a radio interview, PIMCO cofounder and co-CIO Bill Gross reiterated his belief that we're entering a "new normal" in the markets -- meaning investors should expect annual returns closer to 4 or 5 percent as opposed to the 10-plus percent returns that many investors have become accustomed to in the past. Gross also says he prefers emerging markets debt over higher-yielding, riskier securities like those of Greece and Spain. That's why he's upped his stake in emerging markets debt to 10 percent in the PIMCO Total Return fund.

Bloomberg:Pimco Draws About $1 Billion a Week, Returns of 10% Unlikely, Gross Says

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