Morningstar Magazine - February/March 2018 - 79

FUND FLOWS SPOTLIGHT

U.S. Investors Turn to International-Equity Funds
Both U.S. and international stocks had strong
returns in 2017, with emerging-markets benchmarks
in the lead. Fund flows didn't necessarily follow
performance. As of the end of November,
international-equity funds had attracted $18.7 billion
(with the bulk of the flows to passive funds).

U.S. equity funds saw overall outflows of $1.4
billion, as $16.6 billion in passive inflows
were offset by $17.9 billion in active outflows.

Investors showed a strong preference for foreign
large-blend funds, which are focused primarily on
Europe. European growth forecasts continue
to look attractive, and investors are following those
prospects despite ongoing Brexit negotiations
and some political turbulence in Spain. Meanwhile,

Alina Lamy is a senior analyst in Morningstar's
quantitative research group.

2017 International and U.S. Equity Monthly Flows

$40B

U.S.

Emerging Markets
Foreign Lg Blend
Other Developed
Markets

30
20
10
0
-10
-20
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Source: Morningstar. Data as of 11/30/2017.

Active Versus Passive Fund Strategies The percentage of U.S. actively managed funds that outperformed their respective Morningstar Style Index.

13.0

16.2%

19.9

38.2%

25.7

51.8%

8.4

42.5%

13.2

41.1%

23.8

Core

Growth

10.5

13.2%

11.3

25.1%

12.9

9.9%

11.3

26.5%

9.9

45.6%

9.9

57.7%

8.2

35.3%

9.8

40.2%

10.6

Value

Core

Growth

44.4%

13.7

3.0%

16.8

21.0%

16.8

0.0%

16.9

16.1%

15.4

39.6%

14.4

Mid

50.5%

13.6%

37.9%

13.6

24.6%

14.3

44.8%

14.5

Small

31.1

Large

28.1%

Mid

22.4

Small

24.8%

Large

15.1

5-Year

Mid

3-Year

64.5%

Value

Index Returns (12/31/2017)

Small

1-Year

p < 20% p 20 to 40% p > 40%

Value

Core

Large

Percentage of Actively Managed Funds Outperforming Index:

Growth

global.morningstar.com/Morningstarmagazine

79


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Table of Contents for the Digital Edition of Morningstar Magazine - February/March 2018

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