Strong 2011 returns and perceived safety led to continued popularity for bond funds last month, while domestic growth funds suffered redemptions.
As economic concerns weighed, taxable-bond funds were the strongest asset gainers in May, but their inflows were only about half what they were the prior month, says Morningstar's Kevin McDevitt.
The Federal Reserve's bond purchases are contributing to greater inflows into fixed-income funds, while demand for stock funds is near multiyear lows.
Investors piled out of U.S. long-term stock funds last year and toward safer options at the greatest rate since the peak of the financial crisis in 2008.
ETF and open-end asset flows combined show a strong preference for bonds, emerging markets, and passive funds, while active U.S. stock fund managers and money market funds have suffered the brunt of outflows.
After strong flows into stock funds earlier this year, investor interest in equities is waning as bond funds remain in high demand, says Morningstar's Mike Rawson.
Morningstar associate director of fund analysis Miriam Sjoblom explains what drove municipal bonds' great performance in 2011 and what issues may lie ahead for muni investors.
Equity funds have experienced outflows over the last five years, but the exodus is not as extreme as it's portrayed.
Market gains have been the only driver of equity AUM growth for most of the asset managers.
Even though credit worries in Europe dominated the headlines, investors took out their frustrations on U.S. stock funds.
These fixed-income funds will happily charge you above-average fees but have been lousy long-term performers.
Investors continue to shun actively managed U.S. stock funds even as equity markets rally.
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