Investors Swap Long Funds for Money Markets
U.S. funds experienced their greatest monthly outflows in December in a decade.
U.S. funds experienced their greatest monthly outflows in December in a decade.
Note: This is an excerpt from the Morningstar Direct U.S. Asset Flows Commentary for December 2018. The full report can be downloaded here. |
Long-term U.S. funds had $83 billion in outflows this month, the greatest since the depths of the credit crisis in October 2008 with $103 billion. However, December's outflows were much less severe as a percentage of total assets, representing 0.46% of nearly $17 trillion in total assets, compared with October 2008's outflows representing 1.43% of nearly $6 trillion of total assets. For all of 2018, long-term funds collected $157 billion in inflows, less than half the $350 billion average for 2008-17. It was also the lowest calendar-year total since 2008, falling just below 2016's $166 billion.
December outflows spanned asset classes, with taxable-bond funds faring worst. U.S. equity funds, which saw notable inflows, were the exception. Meanwhile, money market funds had strong inflows of $57 billion, capping their best year since 2008. In 2018, they collected nearly $162 billion versus $594 billion in 2008, and their 5.7% organic growth rate beat any of the long-term categories.
Actively managed funds had record outflows of nearly $143 billion in December. Passive funds generally gained at their active counterparts' expense, though perhaps not to the degree expected, as they collected nearly $60 billion in inflows. For the year, active funds had about $301 billion of outflows, just shy of 2016's $320 billion. That said, active exchange-traded funds continue to grow in popularity and had their strongest year yet with $27.8 billion in inflows. Passive funds collected $458 billion, lagging 2017's record $663 billion. At year end, actively managed funds had overall market share of 61.2% versus 38.8% for passive vehicles.
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