U.S. equity fund outflows are at their highest peaks in over 20 years, with international equity reaping the benefits. Outflows of U.S. equity increased to $14.3 billion in July from $8 billion in June, with consistent inflows to passive equity funds unable to offset sustained outflows from active funds.
That’s the finding from Morningstar ‘s monthly report of estimated U.S. mutual fund and exchange-traded fund (ETF) asset flows. Morningstar estimates net flow for mutual funds by computing the change in assets not explained by the performance of the fund and net flow for ETFs by computing the change in shares outstanding.
Additional highlights from Morningstar’s report:
- International-equity funds collected inflows through July that approach the peak of $201.6 billion seen in calendar-year 2013.
- Foreign large-blend funds, with inflows of $21.3 billion, collected greater inflows than the next four top-asset-gathering categories combined in July.
- J.P. Morgan and American Funds were the only two providers with robust active fund inflows in July. Vanguard’s active funds saw outflows for the third straight month, but its passive-fund inflows continue to be strong, followed by State Street and iShares.
- PIMCO Income, which has a Morningstar Analyst Rating of Silver, and Metropolitan West Total Return Bond, which has an Analyst Rating of Gold, continued to attract solid flows following consistent performance. Bronze-rated PIMCO Total Return was once again the leader in terms of outflows among active funds. Illustrative of the general move away from U.S. equities and toward international stocks, three Vanguard funds were among the five passive funds with the greatest monthly outflows, while two of the firm’s international index funds had the highest and third-highest July inflows.
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.
