Investors Pour Money Into Stock Funds

BOSTON (TheStreet) -- U.S. investors poured a net $22 billion into
stock funds last quarter after favoring bond funds for most of the
previous two years, following a rally in companies including tech
darlings **(CRM), *Netflix*(NFLX) and *Apple*(AAPL).
For all of 2010, equity funds suffered outflows of $36.4 billion,
about half that of the previous year and the smallest amount since
2006, according to preliminary data collected by fund-tracking firm
EPFR Global, which included exchange traded funds. Bond funds'
outflows totaled $7.3 billion in the fourth quarter, holding net
inflows for the year to $178.4 billion.

Stock-fund inflows in the fourth quarter marked the return of
so-called retail investors, or average Americans, who had been keeping
as much as $1 trillion parked in safer securities such as fixed-income
investments, according to some analysts. Still, investors have a
conservative bent, favoring Dow stocks and other income and dividend
investments. Funds that buy those types of securities had inflows of
$6.2 billion in 2010, said Brad Durham, managing director of EPFR

Mutual fund managers including *Legg Mason's* Bill Miller and Donald
Yacktman of the *Yacktman Focused Fund* are favoring the largest U.S.
stocks after trailing their rivals last year. Still, investors have
boosted the share prices of growth companies, including
cloud-computing company, movie-streaming provider
Netflix and Apple, maker of the iPhone and iPad, while shunning the
likes of mega-cap companies *General Electric*(GE) and *Pfizer*(PFE).
That's as nine of the 10 sectors in the *S&P 500 Index* saw improved
earnings in the fourth quarter compared with a year earlier, according
to Thomson Reuters.

The stock-market rebound has been different this time around, as
investors may still be scarred from the crash of 2008, analysts said.
In addition, keeping some of them in bond funds longer were crises
including Europe's debt woes and political conflicts in Asia.

As a result, some investors missed out on a late-year surge in stocks.
U.S. equity funds posted, on average, a one-year return of 16.6% in
2010, beating the *S&P 500's* 15% gain, including a 6.4% increase in
December, the best performance by stock funds in that month since
1999, according to Lipper Fund Market Insight. Source: