Passive strategies pulled ahead in the ongoing “taste great, less filling” debate over management styles.
Morningstar reported U.S. mutual fund and exchange-traded fund (ETF) asset flows for May. Investors continued to direct money to international-equity and taxable-bond funds during the month. International equity led all Morningstar category groups with inflows of $24 billion, most of which went to passive strategies.
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 May:
- Outflows for active U.S. equity funds slowed to $13.0 billion after an April outflow of $18.9 billion that was the category group’s largest since July 2011.
- Foreign large blend funds topped all Morningstar categories in terms of May inflows, illustrative of the general move toward international equity. Intermediate-term bond funds led the way among taxable-bond offerings.
- May was a difficult month for providers of active strategies. Among the 10 largest firms, American Funds, T. Rowe Price, and J.P. Morgan managed to stay in positive territory, but overall flows for each totaled less than $1.0 billion.
PIMCO Total Return, which has a Morningstar Analyst Rating of Bronze, led outflows among active funds for the 10th consecutive month, although its $2.6 billion outflow was the smallest since Bill Gross left PIMCO last September.
Meanwhile, Silver-rated PIMCO Income landed fifth among active funds with the greatest inflows for the month.
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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.
