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Fund Flows: Insights on Investor Sentiment & Market Trends
Discover how fund flows data reveals investor sentiment, market trends, and opportunities for asset managers to stay ahead in a competitive landscape.
By the end of 2025, exchange-traded funds once again set a record for annual inflows, collecting nearly $1.5 trillion and taking more market share from open-end funds. Exponential growth of active ETFs persisted, as they brought in over $450 billion for the year.
Fund flows offer a wide-angle view of how investors and the advisors guiding them respond to market conditions. They reveal sentiment shifts, highlight product demand, and expose trends in the asset management landscape.
Whether you’re shaping product strategy, talking to clients, or positioning funds for growth, this guide can help you take the pulse of the global market and stay a step ahead.
What Types of Fund Flows Does Morningstar Cover?
With the right analysis, fund flows information can tell a larger story about investors.
Flows by Region
Fund flows by domicile show how investor behavior differs by country.
With detailed global data, asset managers can make informed decisions on upcoming product launches.
Flows by Fund Family
Fund family flows roll up all the funds by brand name for a big picture look at competitor performance.
Grouping flows by fund family can illustrate gaps in competitor coverage. You can see patterns in new product launches and pending fund shutdowns.
Flows by Morningstar Category
Category fund flows offer a detailed lens for analyzing investor preferences. The Morningstar category reflects the underlying securities, not the prospectus. In the United States, Morningstar organizes US funds into 11 category groups:
- US Equity
- Sector Equity
- International Equity
- Allocation
- Taxable Bond
- Municipal Bond
- Alternative
- Commodities
- Nontraditional Equity
- Miscellaneous
- Money Market
Passive vs. Active Fund Flows
Over the last two decades, the US market has undergone a tidal shift from active to passive investment vehicles. Market lows, when valuations drop, create a crunch for mutual fund managers who generate asset-based fees.
Asset flows can illuminate corners of the market where active management continues to drive mutual fund inflows. Asset flows by distribution channel can help understand the target audience of each approach.
Since passive funds surpassed active funds in total net assets back in 2023, they’ve continued to gain market share of the US funds universe. As of year-end 2025, passively managed funds made up over 55% of net assets, increasing from 53% the year prior. This trend shows no signs of reversing; however, active managers in certain asset classes are faring better than others.
How Does Morningstar Measure Fund Flows?
Fund flows measure changes in newly purchased or redeemed shares over a certain period. Fund flows don’t measure changes in price.
To calculate net flows, Morningstar uses an industry-standard approach.
- Our team compares a fund’s total assets under management at the beginning and end of a period.
- Researchers back out price changes, distributions, and reinvested dividends to exclude them from net flows.
- From there, analysts adjust for infrequent corporate actions such as reverse share splits.
Asset flows data intends to show shifts in investor preference with movement between noticeably different investment strategies. When possible, Morningstar offsets outflows caused by movement to another fund with an identical mandate.
To calculate the organic growth rate and show fund flows as a percentage, analysts divide net flows by the total assets under management at the beginning of the period.
Morningstar’s approach assumes that fund flows occur at the same rate over the course of the month. While fund flows are estimates, the difference from the precise total is often negligible. Morningstar will overwrite our estimates with data from managers when available.
The chart below shows the organic growth rate for long-term US funds. Total assets grew 2.5% by the end of 2025, relative to the year before.
What Factors Affect Fund Flows?
Morningstar analysts compared mutual fund flows from 2003–14 and 2015–18 and found several variables that consistently aligned with investor preferences:
- Strong performance
- Positive firm reputation (measured by metrics like the Morningstar Medalist Rating)
- Recommendations from independent rating agencies
- Index-tracking strategies
Do Fund Flows Drive Stock Prices?
In theory, asset flows should move in the same direction as security prices.
When investors put more cash into mutual funds, asset managers can buy more stocks and bonds, driving prices up for the fund itself. The opposite should also hold. When investors redeem or sell mutual-fund shares, asset managers sell off underlying securities, often depressing prices.
But this rule doesn’t always prove true.
Asset flows sometimes go against security prices. For example, US equity funds experienced a total outflow of more than $32 billion, despite strong gains for equity markets in 2025. The pace of individual transactions can affect how prices respond.
Morningstar’s fund flows data is updated monthly, providing a timely view into investor sentiment and market dynamics.
How to Navigate Market Volatility with Fund Flows Data
Market volatility can shake investor confidence; fund flows data can provide clear guidance during uncertain times.
With Morningstar Direct to analyze fund flow data, investors can decode trends across asset classes and uncover insights into investor behavior.
Click the image below to watch a short video on how.
Fund Flows by Asset Class
Fund flows also shine a light on how investors feel about the underlying asset classes.
Fixed income maintains a strong presence, but taxable-bond funds still had a banner year
Fixed-income assets grew from both inflows and appreciation to the tune of about $900 billion (growth of 13%), while equity assets grew by nearly $3.5 trillion (growth of nearly 16%) despite the minuscule inflow. Significant flows into fixed-income funds were likely needed in 2025 to keep otherwise soaring equity allocations in check.
Taxable-bond funds dominated the year’s inflows again, bringing in a record $540 billion, representing 70% of total flows, much of which was concentrated in the more conservative Morningstar Categories. While passively managed taxable-bond funds took in over 55% of the year’s inflows, actively managed funds still had a strong year. The trend of passive funds taking market share from active funds is consistent across the board for equities and fixed income, but it’s been more pronounced with equity funds.
Money market flows showed positive momentum in 2025
After a brief period of outflows in March and April, money-market funds attracted inflows for the remainder of 2025. December saw the highest monthly inflows for the category since November 2024. Money-market fund assets ended the year at about 23% of total long-term assets.
How Can Asset Managers Use Fund Flows Data to Position Investment Products?
In today’s competitive investment landscape, asset management firms need effective ways to showcase their products’ strengths and align with investor preferences. Fund flows data provide a powerful lens into market trends, offering insights that validate your positioning and inform strategic decisions.
By analyzing fund flows, asset managers can:
- Identify categories attracting the most inflows.
- Understand who’s buying from competitors—retail investors, institutional clients, or others.
- Analyze how their products compare to influential flow factors.
- Anticipate fund closures and monitor competitors’ strategic pivots.
- Prioritize which funds to promote in specific regions, aligning resources with investor interest.
- Uncover gaps in the competition and track AUM trends across major fund families.
Fund flows also reveal investor preferences, such as whether they prioritize recent performance or low expenses, helping firms position their products to meet expectations. By leveraging this data, firms can shift resources to high-demand products, explore untapped opportunities, and differentiate themselves in a crowded market.
Asset Flows in Morningstar Direct
Morningstar Direct gives users the data, research, and analysis they need on over 600,000 collective investments. In the platform, asset managers can show how their investment stories relate to the broader markets, compare products with the competition, and present their findings in compliance-friendly reports.
Morningstar’s asset fund flows data dates to 2008, with forecasting models for future growth rates. Direct includes all fund flows data at one price with its performance reporting, presentation, and search capabilities. The Direct team also supports new users with onboarding, training materials, and 24-hour customer service.
