The bloodletting continues. U.S. equity funds had a pretty good December, but nonetheless came up short for the year as a whole. Morningstar reports that the sector topped all category groups with inflows of $16.8 billion in December but ended 2015 with net outflows after two years of net inflows. International-equity funds led all category groups in terms of highest inflows for the calendar year, collecting $207.6 billion.
Unsurprisingly, taxable-bond funds sustained the worst outflows by category group in December, $29 billion, most of them driven by the high-yield category. The reason? “Turbulence” created by Third Avenue Management’s announcement that it would liquidate its high-yield bond fund, Third Avenue Focused Credit, without allowing investors to redeem their shares right away, along with decreasing oil prices. It led to December outflows of $11.2 billion for the category, the third-largest monthly outflow since 1993 when Morningstar’s data began.
With a few exceptions, active funds suffered while their passive counterparts reaped the majority of inflows in December and throughout 2015. In December, two of only three firms with inflows to actively managed funds were those that specialize in the passive side of the business—Vanguard and State Street.
Franklin Templeton suffered heavy outflows in December, with two of the firm’s fixed-income offerings leading the list of active funds with the highest outflows. Templeton Global Bond and Franklin Income had outflows of $2.2 billion and $1.7 billion, respectively.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
