Morningstar Magazine - December 2017/January 2018 - 79

FUND FLOWS SPOTLIGHT

U.S. Fund Investors Retreat to Taxable Bonds
The several months after last year's presidential
election saw a resurgence in U.S.-equity flows.
However, more-recent flow patterns suggest
a fear that the U.S. bull market might be nearing

its end. While the U.S. stock market posted strong
returns, investors are diversifying into less risky
territory with bond funds. Despite expectations of
rising rates, taxable bond was once again the

most popular category group in September, with
$34.9 billion in flows overall, significantly
higher than the $27.5 billion it had received
in August.

Monthly Flows by U.S. Category Group
U.S. Equity
Sector Equity
International Equity
Allocation
Taxable Bond
Municipal Bond
Alternative
Commodities

$100B
80
60
40
20
0
-20
-40
10/2016

11/2016

12/2016

01/2017

02/2017

03/2017

04/2017

05/2017

06/2017

07/2017

08/2017

09/2017

Source: Morningstar. Data as of 09/30/2017.

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

17.7

42.1%

21.4

52.8%

25.6

78.6%

19.5

83.0%

21.3

30.8%

31.1

Core

Growth

9.3

6.6%

11.5

29.4%

12.2

15.4%

10.2

24.2%

9.4

49.4%

9.2

58.0%

7.9

51.0%

8.8

41.2%

10.6

Value

Core

Growth

56.3%

12.6

3.0%

16.4

27.4%

16.4

0.0%

16.6

15.4%

15.3

32.9%

14.4

Mid

58.7%

15.2%

46.8%

13.5

38.8%

14.3

36.1%

14.9

Small

29.4

Large

27.6%

Mid

24.5

Small

26.9%

Large

19.7

5-Year

Mid

3-Year

51.8%

Value

Index Returns (10/31/2017)

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 - December 2017/January 2018

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