Investors tepidly approach bond funds; equities still toxic

Investors tiptoed back into taxable bond funds in April after a dramatic $221 billion in net outflows in March. The asset class saw about $14 billion in net new money during the month while equities continued to experience net outflows despite a 12% rebound in the S&P 500 index.

BlackRock and Prudential were the top managers during the month by net inflows. BlackRock's mutual funds added a net $3.8 billion during the month, while Prudential added $2.1 billion with inflows concentrated in their respective high-yield bond funds. The Bloomberg Barclays U.S. Corporate High Yield index was up 4.5% in April on news that the Fed would begin to support the market through corporate bond purchases and the $1 trillion stimulus plan to in part help small businesses.

Vanguard's spot at the bottom was a function of the company's size and offerings. While its broad-market U.S. investment-grade bond and international bond funds had net inflows of more than $10 billion, outflows from its equity index funds more than offset those additions. The Vanguard Total Stock Market Index Fund, an S&P 500 proxy, saw a net $13.2 billion in outflows, $11.5 billion more than the next fund by net outflows, the PIMCO Income fund.