Compelled by the collapse of the financial system in 2008, investors were forced to reevaluate their overall portfolio allocation in terms of both asset type and region exposure. The quick response of many investors was to abandon equity and reallocate that capital toward fixed-income products in hopes of insulating themselves from any further downward shifts.
From Oct. 31, 2008, through the end of 2011, U.S.-based fixed-income funds experienced roughly $664 billion of net inflows. In comparison, equity funds reported net redemptions of $121 billion over the same period, while the subgroup of domestically focused products recorded staggering outflows of $251 billion. Interestingly, outside the domestic equity space, there were some actual stock fund inflows ($130 billion net); $59 billion, or roughly 45% of those, went to emerging market equity offerings.
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