Passive U.S. equity funds saw $6.6 billion in inflows while active U.S. equity funds had $23.5 billion in outflows.
Together, it was the worst outflows for U.S. equity funds since June 2018.
According to Chicago-based research and consulting firm Morningstar, there’s strong demand for fixed-income investments in the wake of recent interest-rate moves.
Net flows
Morningstar reported on U.S. fund flows for July, and the highlights (or lowlights) include the following:
- In July, long-term funds collected nearly $26.7 billion, a drop from June’s $46.1 billion. Net flows went to taxable-bond, municipal-bond, and money-market funds as interest-rates continued to fall.
- Money-market funds took in $75.7 billion in July. The group has collected about $202.0 billion over the past three months alone, the strongest three-month stretch in at least 10 years.
- Taxable-bond funds saw about $40.2 billion in inflows in July, the group’s best showing since January 2018. It was also the best month for active taxable-bond funds since October 2012, which collected nearly $27.0 billion, more than twice the inflows for passive taxable-bond funds. This reflects the popularity of credit-oriented strategies, which active funds tend to favor more than their passive counterparts.
- The positive momentum for municipal-bond funds also continued in July, as the group collected $10.2 billion in inflows. If this pace continues, 2019 could be a record year for municipal-bond inflows, which were nearly $60.9 billion for the year-to-date through July.
- Among all U.S. fund families, Vanguard led with nearly $14.9 billion in long-term inflows. Its Vanguard Total Bond Market II Index and Vanguard Total Bond Market Index, which both currently have a Morningstar Analyst Ratin of silver, fared best with inflows of $3.2 billion and $2.4 billion, respectively. On the other hand, iShares had about $4.2 billion in outflows, its worst outflows since June 2018.
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.