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US Fund Flows: Mutual Funds and ETFs Bounce Back in May

Long-term US mutual funds and exchange-traded funds gathered $58 billion in May 2024 after suffering outflows last month.

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Key Takeaways

  • Taxable-bond funds pushed their 2024 inflows over $200 billion with a $36 billion haul in May.

  • Large-growth equity funds enjoyed their strongest month of inflows since March 2022, taking in nearly $5 billion.

  • Alternative ETFs reeled in more than $3 billion behind more inflows into bitcoin and defined-outcome ETFs.

After a sudden dip in April, US funds took in $58 billion in May, marking a resumption of their prior trend. Demand was broad based, as seven of the 10 category groups enjoyed inflows. Passively managed offerings took in $73 billion, while actively managed strategies saw roughly $15 billion leave.

The charts below illustrate which direction the money is flowing for a variety of fund types. For a more complete analysis, download the full report from Morningstar’s Adam Sabban and Ryan Jackson.

This data was sourced from Morningstar Direct. Not a user? Get a free trial of Direct.

Onward.

A chart showing monthly US fund flows from June 2023 through May 2024. After suffering outflows in April 2024, money flowed back into US funds in May 2024.

Taxable-Bond Funds Keep Rolling

Taxable-bond funds are on a roll. They raked in $430 billion from January 2023 through May 2024, scoring inflows in all but one month over that span. Meanwhile, all other US funds collectively bled $133 billion. How bond-fund investors have fared depends largely on when they jumped in. The Morningstar US Core Bond Index climbed 5.3% in 2023 but slid 1.5% in 2024 through May.

A chart showing taxable-bond monthly net flows exceeding all other monthly net flows in May 2024.

Alternatives: Another Avenue for ETF Growth

Exchange-traded funds expanded their share of the liquid alternatives market from 6% to 47% over the five years ended May 2024. Two main developments explain the rise. The first was the advent of defined-outcome, or “buffer” ETFs, whose downside protection vaulted them into the mainstream after the early-2020 pandemic-fueled drawdown. The second was the early-2024 launch of bitcoin ETFs—an immediate sensation that drove alternative ETFs to new heights.

A chart showing the growing gap between Alternative ETF assets and Alternative mutual fund assets after February 2024.

Large-Growth Funds Shine in May

US equity funds are off to a slow start to the year, with just $18 billion of cumulative inflows. Index funds typically dominate the category group, and May was no exception: Passive funds took in $44 billion, while active funds shed more than $17 billion. Large-growth funds notably enjoyed their strongest month since March 2022, taking in $4.7 billion. The Invesco QQQ and Invesco Nasdaq 100 ETFs were the category’s top flow winners in May; both feature huge stakes in the largest tech companies.

A chart showing large-growth monthly net flows ticking up in May 2024.

More on Fund Flows from Morningstar

For more comprehensive analysis and commentary on US Fund Flows, download this month’s full report. Additional topics include:

  • Balanced Effort From Bonds
  • Municipal Bonds Try to Regain Momentum
  • Flows Into Utilities Funds Highlight an Otherwise Bleak Month for Sector-Equity Funds
  • Capital Group Active ETFs Flourish

Can’t get enough fund flows data? Check out Morningstar’s Ultimate Guide to Fund Flows.

This article is adapted from the Morningstar U.S. Fund Flows report for May 2024. Download the full report here.

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