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Tracking U.S. Asset Flows in 11 Charts

Most fund categories enjoyed gains in 2017, but it was another tough year for many active managers.

U.S. mutual fund investors may have enjoyed good news virtually across the board in 2017, but for active managers, it was another tough year in the asset flow competition against passively run strategies.

However, it wasn't all bad news for active managers, as active bond strategies saw their biggest inflows in five years.

For the seventh consecutive year, passive strategies tracked by Morningstar took in more net new cash than active strategies. While the overall outflow from active strategies slowed from 2016, the huge gap that opened between active and passive flows in 2015 narrowed only slightly...

... and the growth rate in assets under management improved even more for passive strategies.

At the same time, active strategies lost more ground against exchange-traded products, where the pace of inflows picked up substantially ...

... as did the AUM growth rate for ETFs.

The news for active managers was particularly bad among funds focused on U.S. equities.

And here, seen in terms of asset growth rate for overall U.S. equity funds ...

... while among U.S. diversified stock fund categories, the bleeding was worst for large-company stock funds.

In this chart the changing composition of the passive flows versus active becomes visible:

But the news was much better for active managers outside the U.S. equity space. Among international stock funds, investors still preferred passive strategies, but the outflows experienced by active managers in 2016 turned positive in 2017.

And among taxable bond flows, active managers had a legitimately solid year.

And through the lens of the split between ETFs and open-end index funds, here's how bond fund flows looked.

All data courtesy of Morningstar Direct.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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