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Commentary

Long-Term Flows Rebound in June

Passive funds record their best month year to date.

Note: This is an excerpt from the Morningstar Direct U.S. Asset Flows Commentary for December 2018. The full report can be downloaded here.

Long-term open-end funds and exchange-traded funds rebounded with $46 billion in June inflows after experiencing nearly $2 billion in outflows in May. Long-term flows were strong during 2019's first half overall, totaling $224 billion, slightly ahead of $219 billion in 2018's first half. Money market funds collected a solid $37 billion in June and took in more during the second quarter than long-term funds, $111 billion versus $93 billion.

Passive funds--across all category groups--had their best month year to date, collecting nearly $69 billion in June. Active funds lost about $22.5 billion to outflows. Overall, passive funds' market share is now close to 40%, up from 37.4% 12 months ago.

Other key takeaways:

  • Passive U.S. equity funds saw June inflows of $29.5 billion versus $20.2 billion of active U.S. equity outflows. Nevertheless, active U.S. equity fund assets remain slightly ahead of their passive counterparts. 
  • IShares led all families with $34.6 billion in inflows, benefiting from strong demand for its equity factor ETFs. State Street followed with $14.3 billion, while Vanguard came in third. 
  • After weak demand in May, taxable-bond funds recovered with an on-trend $37.4 billion in inflows. Conversely, demand for international-equity funds has dried up; this group had $5.5 billion in June outflows, and year-to-date inflows are less than $1 billion.