After a spark in December, U.S. equity funds fizzled in January, as investors fled for foreign shores, dumping assets into international equity in a possible sign of confidence overall.
Morningstar reported estimated U.S. mutual fund and exchange-traded fund (ETF) asset flows for on Friday, noting international equity inflows of $9.9 billion for the month.
The Chicago-based research firm also found that municipal-bond fund flows have been positive since October and on the rise in the last two months, suggesting investors are seeking the safety and tax breaks of municipal bonds amid rising interest rates and bond market uncertainty. Meanwhile, taxable-bond funds have experienced volatile, mostly negative flows since June and lost $3.5 billion to outflows in January.
As for commodities, the asset class saw higher-than-normal inflows of $3.3 billion in January, with passive funds collecting most of the new assets. Precious metals funds had their first notable inflow in six months, led by SPDR Gold Shares with inflows of $1.4 billion.
Lastly, the panic in the high-yield market following the closure of Third Avenue Focused Credit in December has somewhat subsided, but concerns remain over the sector’s resilience in an environment of falling oil prices. Outflows continued in January, but they were much smaller than the $11.2 billion that exited the category in December.
Among active funds, DoubleLine Total Return and PIMCO Income were investor fixed-income favorites in January, along with equity offerings Cambiar International Equity, American Funds Europacific Growth, and American Funds American Balanced.
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.
