Investors displayed an overwhelming preference for taxable-bond and international-equity funds last year. As the U.S. stock bull market is fast approaching its nine-year anniversary, two trends have become predominant: rebalancing from stocks to bonds, and diversifying stock allocations internationally.
Taxable-bond funds were by far the most popular Morningstar category group in terms of active flows, demonstrating that an active manager's skill in fixed income is still valued. On the flip side, active U.S. equity was the most unpopular category group, with a $207 billion outflow in 2017. The two other category groups with negative flows on the active side were allocation and sector equity.