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Commentary

Investors Turn to Taxable-Bond, Commodity Funds in February

Meanwhile, outflows from active U.S. equity funds and inflows to passive funds continued.

Rocked by tumultuous markets in January, fund investors flocked to the perceived safety of bonds and gold in February.

Taxable-bond funds experienced nearly $8 billion in estimated net flows--more than any other category group overall. The U.S. equity group continued to experience outflows, but at a much lower rate than January. International equity, after being the leader for many months, received smaller but still positive flows in February--most of which was on the active side. Finally, commodities experienced another positive month, attracting a much larger inflow than in January, most of it driven again by investors piling into gold-related funds.

Other items of note in this month's report include:

  • On the U.S. equity front, the ongoing trend of outflows from active funds and inflows to passive funds continued. 
     
  • Allocation and taxable bond were two other category groups to post outflows on the active side this past month. Notably, passive taxable-bond funds experienced significant inflows of $12.9 billion. 
     
  • Conversely, active funds in the municipal-bond and alternatives category groups received significant inflows, suggesting that investors find active management to be more appealing in these categories.
     
  • Four of the five funds on the top-flowing active funds list were fixed-income funds.
     
  • High-yield funds have been struggling in the past 12 months. Despite poor returns, however, February flow data shows that investors are returning.
     
  • Foreign large-blend remains the category attracting the largest flows.

Access the full report here (PDF).