Morningstar Magazine - October/November 2017 - 95

FUND FLOWS SPOTLIGHT

Small Shifts in the Active vs. Passive Trend
The taxable-bond and international-equity
Morningstar category groups attracted the most
flows in July; $34.7 billion and $23 billion,
respectively. For both, the majority of these flows
came from passive funds. Active flows,
however, were also positive and considerable
in size. In fact, international-equity funds

bucked a longer-term trend of outflows from
active offerings.

Alternative and commodities funds suffered
outflows overall, but saw inflows to active
management in July-a reversal of the customary
pattern lately.

U.S. equity, overall, remained in outflow territory,
dragged by $19.6 billion in redemptions
from active funds. However, passive U.S. equity
funds still received $10.8 billion in inflows.

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

Total (Active + Passive)

Active

Passive

Estimated Net Flows $Mil

Estimated Net Flows $Mil

Estimated Net Flows $Mil

U.S. Category Group

July

U.S. Equity

1-Year Assets $Bil

July

-8,822

38,208

7,284

1,521

27,710

862

-446

International Equity

22,951

153,768

2,929

Allocation

-2,594

-37,106

Taxable Bond

34,700

Municipal Bond
Alternative

1-Year Assets $Bil

1-Year Assets $Bil

3,862

10,805

283,057

3,422

-27,591

402

1,968

55,301

460

7,083

-24,600

1,700

15,868

178,368

1,229

1,315

-2,798

-38,259

1,248

204

1,153

67

311,142

3,541

13,624

122,117

2,478

21,077

189,025

1,063

2,885

10,115

680

2,481

4,338

648

404

5,776

32

-423

-8,717

212

10

-7,894

165

-433

-823

46

Commodities

-1,871

-6,177

90

1,007

2,263

26

-2,878

-8,440

63

All Categories (total)

48,348

488,942

16,912

1,333 -214,476

10,529

47,014

703,418

6,383

Sector Equity

-19,627 -244,850

July

Source: Morningstar. Data as of 07/31/2017.

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

12.7

54.8%

11.2

38.5%

16.1

67.9%

10.2

76.3%

10.3

55.5%

15.1

Core

Growth

7.0

1.2%

11.4

27.8%

10.9

16.7%

8.0

16.8%

7.7

44.6%

7.5

43.0%

5.7

39.6%

6.7

47.7%

8.0

Value

Core

Growth

52.0%

12.1

2.3%

15.8

32.2%

14.9

0.0%

16.3

10.6%

14.4

32.1%

13.2

36.2%

13.0

38.3%

13.2

43.2%

13.0

Value

Core

Large

33.9%

29.3%

Mid

20.9

Large

30.4%

Mid

19.2

Small

8.6%

Large

11.8

5-Year

Mid

3-Year

61.4%

Value

Index Returns (08/31/2017)

Small

1-Year

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

Small

Percentage of Actively Managed Funds Outperforming Index:

Growth

global.morningstar.com/Morningstarmagazine

95


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