May Was a Bad Month for Active Mutual Fund Managers

Passive Strategies

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:   

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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