Equity Funds Experience Outflows as Investors Cut Risk
Last month, U.S. open-end funds and ETFs experienced their greatest outflows since August 2015.
Last month, U.S. open-end funds and ETFs experienced their greatest outflows since August 2015.
Investors cut risk in June 2018 as long-term U.S. open-end funds and ETFs had their greatest outflows since August 2015. While the bulk of outflows came from U.S. equity funds, which lost $20.8 billion to redemptions, they were hardly alone. Sector-equity, international-equity, allocation, alternative, and commodity funds all had net outflows; only taxable-bond and municipal-bond funds had inflows.
June capped the fourth-worst first half for U.S. equity flows over the past 10 years; only 2009, 2015, and 2016 were worse. The bulk of the net outflows were from large-cap funds, with $19.4 billion leaving large-blend funds alone. This was also the largest monthly outflow for large-blend funds in at least a decade.
In a bit of a paradox, the greatest net outflows came from active U.S. equity funds, which had $17.1 billion in net redemptions versus negative $3.7 billion for passive funds. But the greatest flows from individual funds came from index offerings: SPDR S&P 500 ETF (SPY), iShares Core S&P 500 ETF (IVV), Vanguard Institutional Index (VINIX), Invesco QQQ (QQQ), and Vanguard Total Stock Market Index (VTSMX). Those five funds combined for $14.7 billion in outflows.
This apparent contradiction can be explained by the fact that a few large passive funds had substantial outflows, but the majority (about 70%) had inflows. On the other hand, only about 26% of actively managed U.S. equity funds had inflows, and none of them were substantial. T. Rowe Price Small-Cap Value (PRSVX) led that group with about $660 million in estimated inflows.
Other items of note:
Download the complete Asset Flows Commentary here. |
Kevin McDevitt has a position in the following securities mentioned above: IVV, VINIX. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.