FUND FLOWS SPOTLIGHT Investors Flock to International Equity Funds Even as many international stock markets continue to lag U.S. markets, investors are pouring money into funds specializing in non-U.S. stocks. International equity funds have garnered seven consecutive months of inflows for the first time in four years, and their 2021 haul is outpacing that of U.S. equity or sector equity funds. Estimated Year-to-Date Net Flow ($B) -30 Foreign Large Blend 25.42 The largest international-stock funds categories continue to attract the most flows, but on an organic growth basis, the smaller categories have seen their assets swell. In just the first five months of 2021, the China region Morningstar Category has grown by 15% to $49.9 billion, the European stock category has grown by 18% 30 Foreign Large Growth 0.48 World Large-Stock Growth 0.48 Size of box represents category assets under management Foreign Large Value 4.4 Diversified Emerging Mkts 41.52 World Small/Mid Stock 7.68 Europe Stock 8.87 World Large-Stock Blend 14.42 World Large Stock Value -7.27 Foreign Small/ Mid Blend 5.44 Miscellaneous Region -0.18 Source: Morningstar Direct. Data as of 05/31/2021. Pacific/Asia ex-Japan Stk 5.36 Japan Stk 0.58 Foreign Small/ Foreign Small/Mid Growth 1.2 China Region 5.33 Mid Value -0.27 to $64.11 billion, and the Pacific Asia ex-Japan category has grown by 15% to $43.4 billion. Katherine Lynch is a data journalist at Morningstar. Diversified Pacific/Asia 1.18 Latin America Stock 0.03 India Equity 0.65 Active Versus Passive Fund Strategies The percentage of U.S. actively managed funds that outperformed their respective Morningstar Style Index. < 20% Percentage of Actively Managed Funds Outperforming Index: 1-Year 81.0% 34.9 48.6% 41.5 40.0% 42.0 3-Year 58.2% 11.4 19.6% 19.0 23.6% 25.0 20 to 40% > 40% Index Returns (06/30/2021) 5-Year 67.3% 11.3 30.6% 17.2 20.3% 24.4 50.5% 53.5 51.0% 48.8 55.6% 43.2 77.5% 9.1 20.0% 15.8 26.1% 24.8 60.6% 11.4 34.2% 14.6 23.1% 22.5 31.9% Value 75.9 72.6% Core 54.5 81.3% 43.5 54.2% Growth Value 8.5 60.5% Core 10.6 59.0% 17.3 67.0% Growth Value 10.8 65.4% Core morningstar.com/lp/magazine 13.0 59.3% 19.4 Growth 95 Small Mid Large Small Mid Large Small Mid Largehttp://www.morningstar.com/lp/magazine