Last updated: 16:56 / Friday, 5 September 2014
Morningstar Report, U.S.

Investors Withdrew Money from U.S. Equity Funds in July for the third-consecutive month

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Investors Withdrew Money from U.S. Equity Funds in July for the third-consecutive month
  • Overall, flows into long-term mutual funds remained positive in July at $14.4 billion but lower than in past months
  • Taxable-bond funds continued to see strong inflows despite declining interest rates
  • High-yield bond funds saw outflows of $7.9 billion

Morningstar has reported estimated U.S. mutual fund asset flows for July 2014. Investors withdrew money from U.S. equity funds for the third-consecutive month, and the pace of outflows increased to $11.4 billion in July from $8.3 billion in June and $6.9 billion in May.

Overall, flows into long-term mutual funds remained positive in July at $14.4 billion, but this total is noticeably lower than in recent months. Morningstar estimates net flow by computing the change in assets not explained by the performance of the fund.

Taxable-bond funds continued to see strong inflows despite declining interest rates. For the past three months, taxable-bond funds have seen the greatest inflows among all category groups.

Despite the strong month for the taxable-bond category group overall, high-yield bond funds saw outflows of $7.9 billion in July after much milder redemptions of $466 million in June and inflows of more than $1.2 billion in each of the previous months of this year except January. Bank-loan funds also saw sizeable outflows of $1.9 billion.

Even though U.S. equity funds saw outflows, Vanguard Total Stock Market Index, Vanguard Institutional Index, and Vanguard Total International Stock Index recorded July inflows of $2.6 billion, $2.2 billion, and $1.8 billion, respectively. With four of the five top-flowing funds for the month, Vanguard topped all providers in terms of July inflows, while Fidelity suffered the greatest provider-level outflows as a result of large redemptions from two of its flagship active U.S. equity funds.

Passive funds continued to dominate, collecting $14.1 billion in July compared with inflows of $0.3 billion for active funds.

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