The $10 Trillion Question

Posted by: Lauren Young on November 30, 2006

In case you missed the news, mutual fund assets have officially crossed the $10 trillion mark.

Tom McManus, a Banc of America strategist, says riskier funds continue to attract even more of investors’ hard-earned dollars. While U.S. stock funds suffered outflows of $1.4 billion in the most recent week, funds concentrating on foreign stocks saw inflows of $1.4 billion.

It is amazing how much money is pouring into the emerging markets. EMR funds took in $123 million in the past week, and total EMR assets have soared to $105 billion, which is close to all-time highs.

As I’ve been talking to fund managers for our year-end outlook issue, it’s clear that many of them think the emerging markets will continue to shine in 2007. Yet I’m reluctant to back up the truck and dump my hard-earned cash into the emerging markets right now. But since we have a new fund supermarket option available in our 401(k), I might shift 5% of my assets into an emerging markets fund.

One fund I’ll definitely check out is American Funds New World (NEWFX), which has a broad, diversified emerging markets mandate. It’s not as volatile as other EMR funds, which is a big plus in my book.

What other emerging markets funds should I consider?

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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