These Funds Have Faced Extreme Flows. Can They Handle It?

Fund flows are kind of funny; they can be bad, good, or indifferent. A fund wants a slow but steady flow of new money so managers can add a little more than they sell. But the markets are not always so kind. Sometimes flows come or go in a hurry, and that’s a problem.

Now, we seem to be at something of an inflection point with economic growth slowing and markets falling. Growth stocks especially are experiencing a reversal of a yearslong trend.

Let’s look at some of the funds that were at both extremes of the flow spectrum over the trailing year through March 2025. I’ll focus on active funds because flows rarely affect passive funds’ ability to execute their approaches. Also, target-date funds adjusting their asset mixes as they get closer to their retirement dates drive large amounts of the flows into Vanguard and Fidelity index funds.

Pimco Income

• One-Year Inflows: $24 billion
• Peak Assets Under Management: $180 billion (as of February 2025)

If you want income, go to Pimco Income PONAX. If you want returns, go to Pimco Income. Dan Ivascyn has delivered both. But you better not mind a crowd, because everyone is going to Pimco Income, which has a Morningstar Medalist Rating of Silver. Bond-fund inflows tend to have a smaller impact than in equities because the bond market has a massive supply of securities like Treasuries and mortgages. That’s not to say flows have zero impact, though. As we saw before with Pimco Total Return PTTRX, a huge asset base can limit how much value a bond fund can add through issue selection and force it to turn to bigger macro calls on the yield curve, credit, and currency futures. Nonagency mortgages, which pay higher interest rates because government agencies like Fannie Mae or Freddie Mac don’t guarantee them, have been a key driver of Pimco Income’s performance. The fund has 29% of its assets in this area, but that’s likely to shrink as the fund continues to get larger.

Dodge & Cox Income

• One-Year Inflows: $16 billion
• Peak AUM: $94 billion (February 2025)

Gold-rated Dodge & Cox Income’s DODIX nice returns and yield also have drawn investors, but its risk is a couple of notches lower than Pimco Income’s. The fund has a big stake in agency mortgages (the kind guaranteed by federal agencies), Treasuries, and corporate bonds. However, it has been dialing back risk lately by reducing that corporate exposure. Asset growth won’t hinder the fund in Treasuries and mortgages but might hamper its ability to add value by picking corporate bonds—a longtime strength for the firm’s deep analyst team.

Baird Core Plus Bond

• One-Year Inflows: $8 billion
• Peak AUM: $39 billion (April 2025)

Gold-rated Baird Core Plus Bond BCOSX is less than half the size of Dodge & Cox Income, and it’s more conservative, so I see no reason to worry about flows here. Performance has been steady rather than spectacular. The fund takes a standard high-quality bond portfolio and sprinkles in junk bonds for yield, keeping that junk stake below 10%. Given Baird’s caution, it’s a bit surprising to see it attracting such big inflows.

Goldman Sachs GQG Partners International Opportunities

• One-Year Inflows: $7.7 billion
• Peak AUM: $50 billion (April 2025)

Although foreign-stock funds have been out of favor, Goldman Sachs GQG Partners International Opportunities GSIHX has not been, thanks to manager Rajiv Jain and his team’s great returns. Artificial intelligence and weight-loss plays have been big boosts, albeit not so much in 2025. Jain takes a flexible approach that involves making big moves between sectors and countries. Has the Silver-rated fund grown too big to make quick opportunistic moves? I don’t think so, but more growth could make it sluggish.

Putnam Large Cap Value

• One-Year Inflows: $7.6 billion
• Peak AUM: $37 billion (February 2025)

Bronze-rated Putnam Large Cap Value PEYAX has been a model of consistency. Darren Jaroch has outperformed peers in every calendar year since 2016. That’s a record that gets investors’ notice. Jaroch blends quantitative and qualitative inputs to build a value portfolio. Although it’s been a turbulent few years, the fund seems to just keep on zipping along. Its large-cap focus and relatively diversified portfolio should make those flows and asset growth manageable.

American Funds Bond Fund of America

• One-Year Inflows: $6.3 billion
• Peak AUM: $94 billion (February 2025)

American Funds Bond Fund of America BFAFX has steadily improved over the past 10 years. Today, we rate its People and Process Pillars High and this share class Silver. The fund is a more cohesive, less risky strategy that can still deliver solid returns and yield. Its wide reach and deep team mean flows are not a concern.

JPMorgan Large Cap Growth

• One-Year Inflows: $5.7 billion
• Peak AUM: $108 billion (January 2025)

Manager Giri Devulapally is coming up on his 20th year at the helm of JPMorgan Large Cap Growth OLGAX, and he’s comfortably ahead of peers and the benchmark. So, it’s no surprise that the flows keep coming. The portfolio is top-heavy with mega-caps, making it well-suited to handling still more money. But it does mean that if Devulapally finds more attractive stocks on the smaller end of large caps, he’ll be limited in how much exposure he can get there.

Baird Aggregate Bond

• One-Year Inflows: $5.2 billion
• Peak AUM: $54 billion (February 2025)

Low costs, sound management, and an emphasis on risk explain the appeal here. Core bond funds like Baird Aggregate Bond BAGIX have plenty of capacity, so don’t worry about sending them a few more dollars.

Vanguard Intermediate-Term Tax-Exempt

• One-Year Inflows: $5.1 billion
• Peak AUM: $89 billion (December 2021)

Munis are not as liquid as Treasuries and mortgages, but there are still plenty to soak up a few billion of flows. Silver-rated Vanguard Intermediate-Term Tax-Exempt VWITX is about $10 billion below its peak from three years ago.

Causeway International Value

• One-Year Inflows: $4.4 billion
• Peak AUM: $13.7 billion (February 2025)

Causeway International Value CIVVX was the biggest surprise to me. Foreign value has been out of favor, and this fund wasn’t even putting up strong results versus peers, but it’s tops in its Morningstar Category for the trailing three years with a nice 12.4% annualized return. Good stock picks have driven the Gold-rated fund’s resurgence.

Big Outflows

American Funds Growth Fund of America

• One-Year Outflows: $19 billion
• Peak AUM: $310 billion (January 2025)

American Funds Growth Fund of America AGTHX could certainly do with a diet, so steady outflows are welcome. We give it an Average Process rating in part because it has so much money to spread among managers and analysts. We rate the fund Above Average for People and Neutral overall.

TCW MetWest Total Return Bond

• One-Year Outflows: $19 billion
• Peak AUM: $91 billion (August 2021)

Wow, that’s a lot of outflows. Silver-rated TCW MetWest Total Return Bond MWTRX shed more than a third of its assets in one year. The causes are clear: four straight years of underperformance from 2021 through 2024 and the retirements of some key leaders at the same time. As a core-plus bond fund, it has a liquid portfolio that should be able to withstand the outflows. However, if this trend continues, it could lead to investment professional departures, something we’ll be watching closely.

American Funds EuroPacific Growth

• One-Year Outflows: $16 billion
• Peak AUM: $199 billion (August 2021)

Our view is a little more positive here than at Growth Fund of America. American Funds EuroPacific Growth’s AEPGX assets are $129 billion, $70 billion off its high point. Despite the asset base, the managers have beaten the category index over the years, and you can see that the portfolio often has key differences by sector and country. I don’t really mind some outflows, as I want to see the managers have some flexibility.

Western Asset Core Plus Bond

• One-Year Outflows: $16 billion
• Peak AUM: $42.3 billion (August 2021)

What happens when you lose three fourths of your assets in a year? Bad things. Western Asset Core Plus Bond WACPX is down to $5 billion, and the outflows are still coming. Former CIO Ken Leech has been accused of improperly allocating derivatives among funds. Although he’s now gone and has yet to have his day in court, investors haven’t stuck around to find out. The giant Franklin Templeton owns Western, so it will stay in business as long as Franklin wants it to. Still, the firm is very much under the gun. It’s not about what those flows will do to the fund, but what they mean for the firm. We still have a Bronze rating on it, so we’re not saying you should bail, but it bears watching.

American Funds Fundamental Investors

• One-Year Outflows: $11.3 billion
• Peak AUM: $146 billion (January 2025)

As with EuroPacific, there’s not much to be concerned about. Outflows are a positive given the huge asset base, and performance has actually picked up lately. Bronze-rated American Funds Fundamental Investors’ ANCFX three-year returns are in the top decile but middling over longer periods. You get your typical Capital Group mix of strong managers running sleeves independently of one another and a fairly modest price.

Vanguard Wellington

• One-Year Outflows: $10 billion
• Peak AUM: $127 billion (December 2021)

Why would people sell this awesome Gold-rated fund? There really is no big detractor here. Performance has been great, and Vanguard Wellington VWENX still has all its usual strengths. Balanced funds like this one used to be at the heart of many 401(k)s, but target-date funds have become the preferred mousetrap for retirement. So, 401(k)s have been steadily dropping balanced funds in favor of target dates for the past 15 years.

Pimco Total Return

• One-Year Outflows: $10 billion Peak
• AUM: $292 billion (April 2013)

The rush for this fund’s exits reminded me of the 2014 exodus triggered by former star manager Bill Gross’ shocking decision to leave Pimco after 43 years. That’s well in the past, but a stretch of middling performance seems to have kept investors leaving. Sibling Pimco Income also could be drawing money from the old flagship fund. Total Return’s past couple of years were solid, and we recently upgraded its Medalist Rating to Gold and its Process Pillar rating to High. We feel like the fund is in a good spot with managers and strategy. In fact, I own this fund.

Test the Waters

As you can see, sometimes flows are a problem, and sometimes they aren’t. Sometimes they reflect declining fundamentals, but it pays to take a closer look before you follow the crowd.

This article first appeared in the April 2025 issue of Morningstar FundInvestor. Download a complimentary copy of FundInvestor by visiting this website.