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Commentary

Investors Return to the Table

Funds experienced inflows in July after losing assets in June, with taxable-bond funds leading the way.

Long-term funds collected $32.1 billion in inflows in July following June's $22.1 billion in outflows. Taxable-bond funds led the way with $24.8 billion in inflows, with passive funds contributing $17.9 billion. Over the past five years, passive taxable-bond funds collected an estimated $635 billion in inflows, over four times greater than the $149 billion collected by their active counterparts. Active funds usually accounted for any outflows from taxable-bond funds during that time. Over the past 12 months alone, passive market share of taxable-bond funds has grown to 30.4% from 28.6%, compared to active market share which has fallen to 69.6% from 71.4%.

U.S. equity funds had modest inflows of nearly $3 billion, with large-blend funds leading with $5 billion in new money. (This number is greater than the group's overall intake, but keep in mind that overall inflows are reduced by outflows from other categories.) This is in keeping with year-to-date trends as large-blend funds have collected $28.2 billion so far in 2018, with small-growth and small-blend funds following with $7.2 billion and $7.1 billion, respectively. In July, large-growth and large-value funds were the least popular, with $3 billion and $1.2 billion in outflows, respectively.

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