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Investors run from pro stock pickers

Jan. 4, 2013 at 4:33 PM   |   Comments

NEW YORK, Jan. 4 (UPI) -- Investors are leaving mutual funds managed by professional managers and shifting money into lower-cost funds that echo the broader market, an analysis says.

Through November, investors pulled $119.3 billion in 2012 from the category named actively managed U.S. stock funds, the biggest yearly outflow since 2008, research firm Morningstar, Inc., reported.

At the same time, $30.4 billion was poured into U.S. stock exchange-traded funds. When combined with bond exchange-traded funds, total inflow was $154 billion, the largest since 2008, The Wall Street Journal reported Friday.

The moves indicate growing investor distaste for volatility and suggest money managers of stock funds, which charge high fees but offer the prospect of higher returns, have underperformed the benchmark stock indices, the Journal said.

Inflows to exchange-traded funds accelerated in December, to $28.1 billion from $20.6 billion in November, said Deborah Fuhr, a partner in London's ETFGI LLP.

"ETFs have really won people over," said Fuhr.

"There has been an overriding theme of anxiety among investors about the stock market," said Avi Nachmany, director of research at research and consulting firm Strategic Insight. "Those companies whose focus is on stocks are suffering."

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