August was a tough month for active funds, but PIMCO may have finally stabilized.
Morningstar reports that among active funds, only the alternative category group saw inflows in August. On the passive side, all category groups except sector equity had inflows. 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 about U.S. asset flows in August:
- Combined active and passive U.S. equity flows stayed in negative territory and overall international-equity flows remained positive, but both decreased in magnitude compared with previous months.
- Taxable-bond funds sustained their largest outflow since August 2013 amid growing uncertainty about whether the Federal Reserve will raise interest rates. Active taxable-bond funds saw August redemptions of $19.5 billion, while their passive counterparts saw a minuscule inflow.
- Each of the 10 largest fund families experienced active-fund redemptions in August except for State Street and J.P. Morgan. Vanguard continued to dominate inflows on the passive side as its main competitor, iShares, sustained its first monthly outflow of the year.
- For the first time since Bill Gross’ departure from PIMCO nearly a year ago, PIMCO Total Return, which has a Morningstar Analyst Rating of Bronze, did not lead monthly fund-level outflows. GMO Asset Allocation Bond surpassed it in August.
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.