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The Year in Funds: Investors Prefer Bonds

Most equity fund categories fall again in third year of historic bear market.

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Another tumultuous year left mutual fund investors bruised and bewildered. The nearly 3-year-old bear market continued to erode account balances, and stock funds suffered their first year of net redemptions since 1988. Bond funds, meanwhile, were on pace to take in more new money in one year than they ever have before.

The typical mutual fund lost nearly 12% for the year through Dec. 18. Equity mutual funds sustained the most damage in a year that savaged all but the most defensive investing styles. The average domestic-stock fund lost more than 20% through Dec. 18 while the typical bond fund gained nearly 6%.

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Dan Culloton has a position in the following securities mentioned above: PTTRX. Find out about Morningstar’s editorial policies.