Passive mutual fund and ETF flows gained big in net assets in March, while active (once again) got whacked.
The month saw investors put $31.1 billion into U.S. equity passive funds, up from $29.1 billion in February 2017.
On the active side, investors pulled $18.6 billion out of equity funds during the month, as opposed to $8.9 billion in the previous month.
In total for both active and passive funds, U.S. equity mutual fund and ETF flows were positive flows for the fifth consecutive month.
Taxable-bond funds attracted the highest total inflows among category groups of $38.1 billion in March. Flows were almost evenly distributed between active and passive taxable-bond funds, underlining that in fixed income, as opposed to equity, active management is alive.
International-equity flows have been positive for four consecutive months, indicating renewed investor interest toward diversification overseas. Investors prefer passive international-equity funds, which attracted $20.6 billion in March, while their active counterparts sustained $2.9 billion in outflows.
Commodities saw $384 million in outflows from precious-metals funds following a drop in gold prices, which later recovered.
Among top U.S. fund families, PIMCO had inflows of $4 billion, surpassing Vanguard in terms of active flows. Vanguard saw inflows of $1.8 billion on the active side and was the top fund family on the passive side, with inflows of $36.2 billion.
Providing a sharp contrast to the predicament of active equity managers, all five top-flowing funds in March were bond funds.
In addition to PIMCO Income, which has a Morningstar Analyst Rating of Silver, fixed-income funds including Bridge Builder Core Bond Fund, Bronze-rated Prudential Total Return Bond, T. Rowe Price New Income Fund, and Gold-rated Dodge and Cox Income attracted more than $1.0 billion each.
Gold-rated Vanguard Institutional Index Fund was the passive fund with the worst outflows of $2.6 billion last month. On the active side, two J. P. Morgan funds, JPMorgan High Yield Fund and JPMorgan Short Duration Bond Fund, landed in the bottom-flowing five in March with respective outflows of $1.7 billion and $1.3 billion.
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.
