Long-term mutual funds collected $414.6 billion in 2019, more than double 2018’s $168.3 billion, according to new research from Morningstar.
Money market flows received $547.5 billion in inflows, the group’s best year since 2008’s record $593.6 billion.
And thanks to rising markets, long-term assets grew in 2019 to $20.7 trillion from $16.9 trillion.
The strong long-term inflows in both December and for all of 2019 was due almost entirely to record inflows for both taxable-bond and municipal-bond funds, which collected $413.9 billion and $105.5 billion, respectively for the year, and $50.3 billion and $10.2 billion, respectively for December.
More active angst
Of course, not everyone reaped the benefits of the current bull which, from a behavioral standpoint, might not be a bad thing.
The S&P 500 gained an incredible 31.5% in 2019, yet active U.S. equity funds saw $41.4 billion in outflows, the sixth year of net outflows during the decade-long bull market.
As expected, their passive counterparts were the main beneficiaries, garnering $162.8 billion in inflows, finishing the year with 51.2% market share based on total assets.
With greater 2019 flows than their active counterparts, passive taxable-bond funds now have a third of that market.
In December, investors directed $25.3 billion of inflows to passive U.S. equity funds, but $23.5 billion of outflows from actively managed U.S. equity funds.
Victorious Vanguard
Among the top-10 largest U.S. fund families, Vanguard saw its best month of the year in December with inflows of $22.3 billion. Its $183.3 billion in inflows for 2019 topped 2018’s $162.9 billion, and the firm’s long-term assets grew by $1.1 trillion to $5.3 trillion—a 25.7% market share.
Vanguard Total Bond Market Index II saw the greatest inflows of 2019 with $29.7 billion. This fund is only available to investors through target-date funds, and this same dynamic likely propelled the $29.0 billion of inflows into Vanguard Total International Bond Index. Both currently have a Morningstar Analyst Rating of Silver.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of 401(k) Specialist and 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. Experienced financial services content executive specializing in creative new media delivery. He joined the American Retirement Association in 2023 as Chief Content Officer, overseeing communications for the organization, as well as its sister organizations.
