The pace of inflows into long-term mutual funds slowed slightly to $27.0 billion in March from approximately $27.9 billion in February, due largely to a reversal in U.S. stock flows, according to Morningstar, Inc.
Equities saw outflows of $934 million in March after taking in roughly $26.1 billion combined in January and February.
Inflows for U.S. ETFs rose to $7.4 billion in March after reaching $6.6 billion in February despite outflows of $3.3 billion from U.S. stock ETFs, which typically drive industry inflows.
Americans have increased their investments in passive emerging-market ETFs. Six years ago, actively managed open-end mutual funds and ETFs comprised 79% of diversified emerging-markets assets, but today make up 53%, Morningstar said.
Additional highlights from Morningstar’s report on mutual fund flows:
- Bank-loan funds, with inflows of $4.3 billion, drove the $18.0 billion that flowed into taxable-bond funds in March. Total category assets for bank-loan funds have reached $59.8 billion, surpassing the $41.2 billion peak reached in June 2007 by nearly 50%.
- Among U.S. stock funds, large-cap offerings lost about $3.2 billion across the value, blend, and growth categories, while small-cap funds enjoyed modest inflows of $791 million. However, investor preference for small-cap offerings hasn’t held with international-stock funds, where large-caps acquired $3.6 billion in new assets versus just $306 million for small-caps in March.
- Municipal-bond fund outflows slowed for a third consecutive month, with less than $2.6 billion in March redemptions. Still, roughly $40.4 billion has vacated muni-bond funds over the last five months, which represents 7.8% of beginning total assets.
- Demand for alternative and commodity funds remained steady with $1.1 and $1.8 billion in March inflows, respectively. Money market funds saw outflows of $12.5 billion in March after inflows of $16.7 billion in February.
Additional highlights from Morningstar’s report on ETF flows:
- Outflows from large-blend and large-growth ETFs accounted for most of the outflows from U.S. stock ETFs, as these categories lost $6.2 billion and $963 million, respectively. However, several categories in the asset class, including equity energy, natural resources, consumer discretionary, and consumer staples, saw inflows.
- After beginning the year with two consecutive months of outflows, international-stock ETFs saw inflows of $6.7 billion in March.
- Taxable-bond ETFs collected assets of $3.1 billion during the month, making a notable contribution to aggregate ETF inflows in March for the first time in seven months.