FUND FLOWS SPOTLIGHT U.S. Investors Turn to International-Equity Funds Most of the top 10 fund companies enjoyed healthy flows in January. (Only Franklin Templeton and J.P. Morgan had outflows.) State Street saw a second month of double-digit billion-dollar flows and almost caught up with Vanguard in terms of passive flows. Its flagship ETF, were American Funds Tax-Exempt Bond AFTEX and American Funds Europacific Growth AEPGX. SPDR S&P 500 SPY, attracted the majority of the incoming money. On the active side, American Funds rallied in January with a $7.9 billion inflow, reflecting a trend of active flows to municipal bonds and foreign stocks. Its two funds with the largest inflows Alina Lamy is a senior analyst in Morningstar's quantitative research group. Monthly Flows into the Top 10 Fund Families Vanguard State Street PIMCO American Funds T. Rowe Price J.P. Morgan Fidelity Franklin Templeton BlackRock/iShares DFA $120B 100 80 60 40 20 0 -20 02/2017 03/2017 04/2017 05/2017 06/2017 07/2017 08/2017 09/2017 10/2017 11/2017 12/2017 01/2018 Source: Morningstar. Data as of 01/31/2018. Active Versus Passive Fund Strategies The percentage of U.S. actively managed funds that outperformed their respective Morningstar Style Index. Index Returns (02/28/2018) 54.3% 6.8 35.9% 11.0 35.6% 21.1 89.6% -0.4 61.7% 7.0 43.4% 19.3 Value Core Growth 7.7% 10.1 11.7% 11.1 23.3% 13.3 8.2% 9.8 30.7% 8.0 49.7% 8.8 71.4% 5.8 46.5% 7.6 44.2% 9.2 Value Core Growth 44.2% 12.0 7.6% 15.0 13.7% 17.6 2.3% 14.4 20.7% 13.2 38.9% 13.4 Mid 30.6 50.5% 10.4 34.9% 11.9 41.4% 13.2 Small 21.1% Large 14.9 Mid 59.3% Small 10.0 Large 59.0% 5-Year Mid 3-Year 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 79http://global.morningstar.com/Morningstarmagazine