F U N D F LO W S S P OT L I G H T
Middle Ground
Recently, Morningstar's intermediate bond category
has attracted the most assets of any U.S. peer group.
In 2016 through July, the funds in this category
took in almost $80 billion.
Investors have chosen to get exposure to this part of
the-fixed income marketplace by using passive
funds such as Vanguard Total Bond Market Index
The appeal of this category could boil down to a
simple explanation: Short-term bonds don't
Active
yield enough, and long-term bonds contained
too much interest-rate risk, so investors are playing
it somewhere in the middle.
VBTIX and iShares Core U.S. Aggregate Bond AGG,
which took in $18.7 billion and $13.5 billion,
respectively. But active funds have also benefited.
DoubleLine Total Return Bond DBLTX has attracted
$7.6 billion this year.
Passive
USD
15K
10
5
0
-5
-10
-15
-20
08/2011
08/2012
08/2013
08/2014
08/2015
-25
07/2016
Source: Morningstar
08/2011
08/2015
05/2013
12/2015
02/2016
04/2015
Active Versus Passive Fund Strategies The percentage of U.S. actively managed funds that outperformed their respective Morningstar Style Index.
15.5
12.1%
10.6
48.1%
4.0
24.4%
12.8
16.2%
12.1
35.3%
6.3
Core
Growth
16.0
7.8%
14.3
6.7%
6.9
4.3%
15.5
3.2%
10.6
29.9%
4.0
12.6%
12.8
7.4%
12.1
33.3%
6.3
Value
Core
Growth
37.8%
16.0
1.0%
14.3
9.4%
6.9
0.9%
15.5
2.4%
10.6
36.8%
4.0
9.5%
12.8
22.3%
12.1
28.0%
6.3
Value
Core
Large
3.5%
20.1%
Mid
6.9
Large
45.1%
Mid
14.3
Small
6.0%
Large
16.0
5-Year
Mid
3-Year
9.7%
Value
Index Returns (08/31/2016)
Small
1-Year
p < 20% p 20 to 40% p > 40%
Small
Percentage of Actively Managed Funds Outperforming Index:
Growth
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Table of Contents for the Digital Edition of Morningstar Magazine - October/November 2016