Morningstar - Q1 2020 - 79
FUND FLOWS SPOTLIGHT
Core Funds Dominate the Decade
Over the past decade, the large-blend Morningstar
Category has cleaned up while most other U.S.
stock fund categories, especially large growth, have
seen outflows. (See Trends on Page 19.) Similarly,
the foreign large-blend category is easily the biggest
winner among the major foreign-stock categories.
Two key trends have catalyzed this zeal for
core fund options. One is a big shift in the financial
U.S. Stock Category
advice business toward a fee-based model that has
encouraged portfolio construction using lowcost, diversified building blocks. The other is the rise
of target-date funds, which tend to invest in
a handful of funds covering major asset classes.
For example, Vanguard Target Retirement 2030
VTHRX and its institutional sibling Vanguard
Institutional Target Retirement 2030 VTTWX have
Net Inflows/Outflows $B
Large Value
Foreign Stock Category
Large Blend
-32.6
Mid-Cap Blend
35.9
-73.0
Small Value
-0.2
Small Blend
675.2
34.1
17.9
Foreign Smid Blend
25.9
Foreign Smid Growth
7.4
Foreign Smid Value
3.3
-89.2
World Smid Stock
-45.0
-700
Foreign Lg Value
World Lg Stock
31.1
Small Growth
280.2
Foreign Lg Growth
-428.7
Mid-Cap Growth
Net Inflows/Outflows $B
Foreign Lg Blend
630.6
Mid-Cap Value
Jeffrey Ptak, CFA, is head of global manager research
for Morningstar.
Div Emerging Mkts
-54.3
Large Growth
funneled nearly $45 billion over the past 10 years
to just four funds: a U.S. total stock market
index fund, a foreign total stock market index fund,
a U.S. total investment-grade bond market index
fund, and a foreign total bond market index fund.
0
7.6
700
-200
0
200
400
600
800
Source: Morningstar Direct. Data as of 11/30/2019.
Active Versus Passive Fund Strategies The percentage of U.S. actively managed funds that outperformed their respective Morningstar Style Index.
< 20%
> 40%
Index Returns (12/31/2019)
61.3%
24.8
16.2%
31.9
32.0%
36.0
68.1%
20.0
12.2%
29.6
49.2%
27.6
Value
Core
Growth
31.8%
10.8
30.0%
14.4
17.9%
21.8
39.4%
8.0
17.0%
12.0
28.8%
18.3
70.6%
2.7
30.2%
8.2
50.3%
14.2
Value
Core
Growth
10.5%
9.8
21.9%
11.0
14.5%
14.6
11.6%
9.0
20.5%
9.3
33.3%
11.8
Mid
33.8
63.1%
4.9
28.9%
8.2
49.4%
10.3
Small
32.8%
Large
33.1
Mid
11.4%
Small
25.7
Large
42.8%
5-Year
Mid
3-Year
Small
1-Year
20 to 40%
Value
Core
morningstar.com/lp/magazine
Large
Percentage of Actively Managed Funds Outperforming Index:
Growth
79
http://www.morningstar.com/lp/magazine
Morningstar - Q1 2020
Table of Contents for the Digital Edition of Morningstar - Q1 2020
Contents
Morningstar - Q1 2020 - Cover1
Morningstar - Q1 2020 - Cover2
Morningstar - Q1 2020 - 1
Morningstar - Q1 2020 - 2
Morningstar - Q1 2020 - Contents
Morningstar - Q1 2020 - 4
Morningstar - Q1 2020 - 5
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Morningstar - Q1 2020 - Cover3
Morningstar - Q1 2020 - Cover4
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