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Bond Funds Dominate in 2019 Fund Flows

Investors pour more than $500 billion into taxable- and municipal-bond funds.

Note: This is an excerpt from the Morningstar Direct U.S. Asset Flows Commentary for the year 2019. Download the full report.

  • With their strongest inflows of the year in December, long-term funds collected $414.6 billion in 2019, more than double 2018's $168.3 billion. Money market flows were even better, receiving $547.5 billion in inflows, the group's best year since 2008's record $593.6 billion. Thanks to rising markets, long-term assets grew to $20.7 trillion from $16.9 trillion.
  • The strong long-term inflows owed almost entirely to record inflows for both taxable-bond and municipal-bond funds, which collected $413.9 billion and $105.5 billion, respectively. With greater 2019 flows than their active counterparts, passive taxable-bond funds now have a third of that market.
  • Despite the S&P 500 gaining 31.5% in 2019, U.S. equity funds had $41.4 billion in outflows, the sixth year of net outflows during the decade-long bull market. Meanwhile, passive funds finished the year with a 51.2% share of the U.S. equity fund market based on total assets.
  • December was Vanguard's best month of the year with inflows of $22.3 billion, which led all firms. Its $183.3 billion in 2019 inflows topped 2018's $162.9 billion, but it was still down from levels hit in 2014 through 2017. Thanks to rising markets, the firm's long-term assets grew by $1.1 trillion to $5.3 trillion--a 25.7% market share.
  • IShares came in second with $119.3 billion in 2019 inflows, but this was the firm's second consecutive drop in year-over-year inflows.

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About the Authors

Kevin McDevitt

Senior Analyst
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Kevin McDevitt, CFA, is a senior manager research analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers primarily domestic- and international-equity strategies, as well as some multi-asset strategies.

Before rejoining Morningstar in 2009, McDevitt was an associate equity analyst and later managed trust portfolios for AG Edwards, which became Wachovia (now Wells Fargo). McDevitt originally joined Morningstar in 1995. He was a mutual fund analyst from 1996 to 1999 and also held positions within the company’s international team, Morningstar Associates, and Morningstar Investment Services.

McDevitt holds a bachelor’s degree in finance from the College of William & Mary and a master’s degree in business administration from Washington University. He also holds the Chartered Financial Analyst® designation.

Nick Watson

Software Sales Engineer
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Nick Watson is an associate manager research analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He assists in the coverage of U.S. equity funds.

Watson joined Morningstar after graduating from the University of Chicago in 2016 with a bachelor’s degree in economics.

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